YEREVAN, September 2. /ARKA/. The Armenian Forum on Cryptocurrency Assets, organized by the Cilicia Business Club, was recently conducted in Yerevan. Participants engaged in discussions regarding the future of digital finance within the country: the challenges posed by new regulations, the significance of self-regulatory communities, and the potential for integrating cryptocurrencies with the traditional financial system.
Andranik Togramajyan, the Head of the Digital Finance Division of the Cilicia Business Club, informed ARKA about Armenia’s prospects in the cryptocurrency and fintech sectors, the challenges faced by the industry, and the nation’s opportunity to establish itself as a regional hub for blockchain technology.
— Mr. Togramajyan, how appealing is Armenia for initiating cryptocurrency or fintech startups in comparison to other countries in the region?
— In terms of financial transactions, Armenia does not rank as the largest nation in the post-Soviet area. However, it is essential to consider this from the perspective of human potential and the accessibility to global markets. Exporting products from Armenia is quite straightforward due to the existing internal infrastructure. The country boasts a high level of digitalization, there is a demand for financial products, and there are always sectors that necessitate innovative solutions.
— What trends in the blockchain sector are likely to be pivotal in the next 3-5 years?
— Making predictions for such a timeframe is challenging due to the industry’s high volatility. Nevertheless, if we focus on the near future, I identify two primary areas. The first is asset tokenization. Following the implementation of regulations, this will attract significant international investors and enhance the transparency of domestic demand. The second is the advancement of cashless payments using digital currencies. This will facilitate transfers, and Armenia is significantly reliant on money transfers and exports. It is crucial for us to streamline financial communications as much as possible.
— What are the primary challenges confronting cryptocurrency projects?
— The cryptocurrency sector has been established in the country for a considerable period, albeit previously within an unregulated environment. There are both external influences — such as the dynamics of global markets — and internal factors — including the potential for stricter regulations. Given that by-laws are still in the process of being formulated, a shift in any direction remains a possibility.
Our primary strength lies in our connections with other nations where Armenians reside. We are a connected community, which enables us to swiftly disseminate ideas, coordinate events, and execute projects.
— How do you evaluate the law “On crypto assets” that was passed by parliament?
— My evaluation will be based on two key criteria. From an external perspective, the law is significant and pertinent — it establishes the operational framework for international stakeholders: exchanges, institutional firms, banks, and trust funds. However, there are internal challenges. The banking system in Armenia is conservative, which has its advantages, yet in certain areas, it should adopt a more liberal stance. In light of the prevailing trend towards Western standards, I believe it would be more beneficial to model our regulations after those of the UAE, Georgia, and Singapore, rather than the European approach, which imposes stringent rules and complicates the operations of startups.
— What makes the European approach unsuitable?
— Acquiring licenses will necessitate substantial financial investment and resources, as compliance with numerous regulations will be required. Considering our cultural mindset, a significant volume of exchange transactions tends to migrate to gray and black markets. While the external landscape appears favorable, internal issues persist. We are endeavoring to communicate our perspective to the Central Bank through such initiatives.
— What measures should the government implement to foster a supportive ecosystem?
— The regulatory body ought to examine the practices of nations with which we engage in substantial trade. The objective is not to entice new participants — they will arrive on their own — but rather to enhance the current economic partnerships. We do not possess a multi-trillion dollar enterprise with Europe. However, we do have significant trade volumes with the UAE, Iran, and various Eurasian and Asian nations. A liberal regulatory framework, considering our modest size, would enable us to draw in additional capital and channel these investments through Armenia. Currently, the regulations are excessively stringent. Numerous international entities may hesitate before entering our market. The market is limited, and it is possible that a license may not even be necessary here. Obtaining a license in the United States and Europe is challenging, yet they boast multi-million dollar markets.
— What are the prospects for Armenia’s integration into international cryptocurrency markets?
— The nation has promising prospects and considerable potential, but a well-balanced, targeted approach is essential. Thus far, at the highest levels, efforts are being made to align this sector as closely as possible with European standards. Unfortunately, we do not match Europe in terms of market size.
— In which sectors are cryptocurrencies most effectively utilized in Armenia?
— In public procurement, where there is a need for increased transparency. In export-import operations with partners, where a digital record of transactions is necessary. In attracting investments — many are already securing cryptocurrency investments from various countries. Armenia boasts a robust trading tradition. Despite the country’s small size, we hold a notable position in the CIS regarding the number of crypto traders. They demonstrate exceptionally high trading volumes, and all exchanges are aware of this.
— Are there specific statistics regarding these volumes?
— Multi-million dollar volumes exist. There are precise figures, but they are challenging to disclose publicly.
— Can Armenia emerge as a regional hub for blockchain technologies?
— Certainly. Consider Georgia — they have implemented regulations for cryptocurrency, fostered active communities, and hosted numerous events and companies. However, due to the initiative of private businesses, many of these entities have begun to approach us. The challenge we face is that we cannot establish ourselves as a hub focused solely on one sector. It is essential to have a targeted policy that involves all stakeholders — from the ministries of economy and finance to the Central Bank and the highest levels of political leadership. Regrettably, we have yet to observe a collective desire for this among all parties.-0-
