This article aims to know the impact of using cryptocurrency that replace conventional money as a means of payment in Armenia. This article belongs to the type of normative legal research that is prescriptive to produce a new concept in resolving the problems faced by supported by a legal approach and a case approach.
The world trade development which grew rapidly as time goes by has an impact in influencing payment systems. Along with the enhancement of the world economy globalization, the need for speed, convenience and security of financial transactions is increasing Therefore, there is a need of reliable and easy payment system for banking customers. The payment system is a mechanism that includes arrangements used for payment through value exchanges between individuals, financial institutions both domestically and globally.
The cryptocurrency is a digital asset that is secured by cryptography. However, discussions regarding the legal status and regulation are still sensible. Crypto, inter alia, is used widely as a payment instrument, and in this sense, various areas of сivil law can intersect.
At the level of a press release, the Central Bank of Armenia, assessed cryptocurrencies as a high-risk instrument. This statement is not legally binding, although, as a soft instrument, it has a certain impact on the policy of private banks in Armenia.
Armenian regulatory framework seems indifferent to this issue. Regarding cryptocurrency, there is only one mention, according to which crypto is an asset. Also, considering the narrow and very specific scope of that law, this cannot be perceived as a general approach. Therefore, target regulations in respect of cryptocurrencies are not in place in Armenia.
But can cryptocurrencies be considered legal tender in Armenia?
According to the law on “Currency regulation and currency control” of Armenia payments between residents of Armenia against the sale of goods (property), rendering of services, insurance contributions, indemnifications shall be accepted and made in Armenian drams unless otherwise provided by the Law.
Concurrently, only in limited circumstances, such as when paying a non-resident, is the use of foreign currency weakened. It should be also highlighted, that in contrast to the mentioned rules when paying by crypto, firstly it is to be justified that crypto is a foreign currency.
According to the same law, foreign currency (foreign exchange) means:
- a) legal tender, such as notes and coins (including souvenir coins) in circulation or out of circulation, but subject to exchange, in one or several foreign countries,
- b) resources denominated in foreign currency and/or international monetary units, which are available in accounts and deposits.
Crypto doesn’t meet any of the mentioned conditions, so there are no restrictions in this point of view.
In addition, crypto can serve as an exchange equivalent. The Civil Code of Armenia entitles contractual parties to place under the ownership of the other party goods, in exchange for other goods. In this scenario, parties have a wide range of decision-making discretion, and any property, including digitalized assets, can be subjected. Unlike a contract of sale, where the transaction can be disputed, If the parties are agreed so, there are no visible restrictions to using cryptocurrency as a value exchange equivalent in Armenia.
However, there is a need of regulations for governing and explaining cryptocurrency as a means of payment in Armenia. The existing regulations do not suggest much valuable on regulating the use of cryptocurrency as a means of payment and does not regulate the prohibition for using it in Armenia. The rules relating to cryptocurrency ownership must also be explained so that users do not report about the loss or manipulation data from the use of cryptocurrency. This effort is to prevent the misuse of cryptocurrency, if its users also have regulations, then if something happens, can report or sue to the state or the authorities.