Armenia's Central Bank intends to create an infrastructure for payments with cryptocurrencies, but with automatic conversion to the national currency, dram. The initiative was announced by the Bank’s Deputy Governor Armen Nurbekyan during the Doing Digital conference on digital finance held in Yerevan.

According to Nurbekyan, Bitcoin should not be considered a primary means of payment due to its volatility. However, the use of crypto assets for payments—similar to how foreign currency cards operate—is entirely feasible, reports Sputnik Armenia.

Nurbekyan stressed that the dram remains the country’s official payment instrument, but that doesn’t preclude making payments, for instance, in U.S. dollars, with real-time conversion into dram. He believes this approach could be similarly applied to virtual cards funded by cryptocurrencies.

Additionally, the Central Bank is exploring the development of a legal framework for stablecoins. Though not classified as traditional currencies, these digital assets are linked to the value of fiat currencies. Nurbekyan suggested that it is possible to consider allowing bank cards based on stablecoins, potentially via Armenia’s ArCa payment system.

Martin Galstyan, Governor of the Central Bank, pointed out that Bitcoin could pose the same risks once seen in medieval times during the use of gold and precious metals as money. When the value of such assets increased, they were hoarded and left the economy; when prices fell, savings depreciated. Galstyan argued that when money is used not only for payments but also as a profit-making tool, it becomes unstable and loses credibility.

Another concern is the independence of cryptocurrency exchange rates from state control, which introduces additional risks. Therefore, Armenian authorities plan to implement oversight of crypto-based transactions.

Nurbekyan noted that in high-inflation countries such as Turkey, Argentina, and Venezuela, people often turn to cryptocurrencies to protect their savings from devaluation. In Armenia, the dollarization rate exceeded 80% more than a decade ago but has since declined to about 30%, indicating greater public trust in the dram amid stable inflation.

While the demand for cryptocurrencies in Turkey is driven by the need for financial protection, in India it is seen as a risky investment. In India and Southeast Asian countries, where youth populations are large, cryptocurrencies are popular tools for saving and asset accumulation.

Cryptocurrencies can also benefit Armenia, especially in terms of faster money transfers, a feature common in other developing nations.

Addressing the question of whether small countries should assume such risks, Nurbekyan said that nations without trillion-dollar reserves may find these investments hazardous. Large economies with strong financial systems can afford such experiments, but in Armenia’s case, such steps may be unwise.

The Central Bank has drafted a law to regulate cryptocurrencies, which will soon be submitted to the National Assembly. It sets identification requirements for crypto owners and market participants. Once passed, exchanges and traders will be given time to comply and obtain accreditation.