Central Bank of Armenia Regulation 7/02 on Minimum Total Capital Threshold for Crypto Assets Service Providers

APPENDIX

Approved:

under the Republic of Armenia Central Bank Board Resolution No. 228-N, dated December 30, 2025

Regulation 7/02

Minimum Total Capital Threshold for Crypto Assets Service Providers; Calculation Procedure and Elements Included in and Deducted from the Calculation

CHAPTER 1

Subject of Regulation

1. This Regulation establishes the minimum total capital threshold for the crypto assets service providers operating in the territory of the Republic of Armenia, the procedure for its calculation, the elements included in the calculation and deducted from the calculation, as well as the amount constituting a violation of the minimum total capital requirement.

2. This Regulation does not apply to branches of foreign crypto assets service providers (foreign entities).

CHAPTER 2

Basic Definitions

3. The concepts used in this Regulation shall have the meanings set out below:

4. “Fixed costs” – costs that do not vary depending on the volume of services delivered by a crypto assets service provider;

5. “Average daily value calculation for the month” – the sum of the daily values during the month divided by the number of days in the month;

6. “Average daily value calculation for the year” – the sum of the daily values during the year divided by the number of days in the year;

7. “Trading portfolio” – a portfolio of an asset or other financial instrument which may include only those assets or financial instruments whose sale or full hedging is not restricted in any way by legal (including restrictions based on the instructions of the Central Bank of the Republic of Armenia), contractual, or other grounds. An asset or other financial instrument may be included in the trading portfolio if it is measured at fair value through profit or loss and the crypto-asset service provider has acquired it for resale in the short term, for generating income from short-term price fluctuations, for generating income from price differences across markets, or for hedging risks arising from instruments meeting the three purposes mentioned above.

8. Other concepts used in this Regulation shall have the meanings defined in the Republic of Armenia Law “On Crypto Assets” (hereinafter referred to as “the Law”), as well as in the normative legal acts adopted on the basis of the Law and other regulatory instruments prescribed by legislation of the Republic of Armenia.

CHAPTER 3

Minimum Total Capital Requirement for Crypto Assets Service Providers and its Thresholds

5. The total capital of crypto assets service providers shall be calculated on a monthly basis.

6. A crypto assets service provider shall ensure compliance with the minimum total requirement on an average daily basis for each month. According to the Law, the first month following licensing shall be considered as the period from the date of licensing until the last day of that month (inclusive).

7. The minimum total capital threshold for crypto assets service providers shall be determined as the highest of the following values:

1. the amount specified in paragraph 8 of this Regulation for the relevant crypto assets service;
2. 25 percent of fixed costs calculated in accordance with Chapter 5 of this Regulation;
3. where the service provided is the issuance of asset-referenced tokens, 2 (two) percent of the average amount of reserve assets calculated in accordance with paragraph 9 of this Regulation, and 3 (three) percent, where the crypto assets service provider has at least 50,000 purchasers of all asset-referenced tokens issued by it within the territory of the Republic of Armenia, calculated as an average daily value for the calendar year preceding the calculation of the minimum total capital requirement.

8. The amount specified in paragraph 7(1) of this Regulation for crypto assets service providers shall be determined as follows:

1. AMD 10 million (ten million Armenian drams), if the crypto assets service provider delivers crypto-asset advisory services;
2. AMD 20 million (twenty million Armenian drams), if the crypto assets service provider delivers any of the following services:
   a. trading (purchase and sale) of crypto assets on behalf of the client; b. receiving and transmitting of orders for the execution of transactions in crypto assets;
   c. placement of crypto assets;
   d. management of a crypto-asset portfolio; e. transfer of crypto assets;
3. AMD 50 million (fifty million Armenian drams), if the crypto assets service provider delivers any of the following services:
   a. execution of purchase and sale transactions in crypto assets on its own account; b. custody/safeguarding of crypto assets;
4. AMD 70 million (seventy million Armenian drams), if the crypto assets service provider delivers the service of operating a crypto-asset trading platform; and
5. AMD 200 million (two hundred million Armenian drams), if the crypto assets service provider delivers the service of issuing asset-referenced tokens.

9. The average amount of reserve assets referred to in paragraph 7(3) of this Regulation shall be the amount of arithmetic mean of reserve assets for the six months preceding the calculation of total capital, which is calculated using the sum of reserve assets available at the end of each day (calculation in accordance with Regulation 7/07 “Requirements for the Activity of Crypto Assets Service Providers” as approved by the Board of the Central Bank of Armenia). Where a crypto assets service provider has issued more than one type of asset-referenced token, the average amount of reserve assets shall be the sum of reserve assets calculated in accordance with the procedure specified in this paragraph for the asset-referenced tokens.

CHAPTER 4

Procedure for Calculating the Minimum Total Capital Requirement for Crypto Assets Service Providers and Elements Included in the Calculation

10. The minimum total capital of a crypto assets service provider shall be determined as the sum of the elements specified in paragraph 11 of this Regulation, after applying the deductions and adjustments specified in paragraphs 12 and 13 of this Regulation.

11. The total capital of a crypto assets service provider shall include the following elements:

1. fully paid-up ordinary shares, shares or units (hereinafter referred to as “ordinary shares”) at the following value: the sum of their nominal value and the share premium (the positive difference between the sale price of the placed shares and their nominal value), less the share discount (the negative difference between the sale price of the placed shares and their nominal value);
2. retained earnings or losses, with retained earnings included in the calculation in accordance with Appendix 1 to this Regulation; and
3. elements of other comprehensive income and reserves included in capital, calculated in accordance with the applicable accounting standards.

12. The amount calculated in accordance with paragraph 11 of this Regulation shall be reduced by the following amounts:

1. the nominal value of ordinary shares issued by the crypto assets service provider, which:
   a. have been repurchased by the crypto assets service provider; b. the crypto assets service provider is obliged, or may be obliged, to acquire in the future under any legal instrument (long position), except in cases of mandatory repurchase provided for by law. A crypto assets service provider may deduct short positions in the same shares (at nominal value) from the nominal value of ordinary shares determined under this subparagraph if: i) the short position does not create counterparty credit risk (for example where a guarantee fund or a central counterparty (CCP) guarantees the fulfilment of the counterparty’s obligation); and ii) the long and short positions in the relevant shares are recorded using the same method, in particular simultaneously in the trading portfolio or in the non-trading portfolio;

2. the carrying amount of the following loans provided:
   a. long-term subordinated loans, where for the purposes of this subparagraph a long-term subordinated loan means a subordinated loan provided under the Civil Code of the Republic of Armenia for a period of at least 5 (five) years; b. loans provided outside the scope of the main activities of the crypto assets service provider or to shareholders or affiliated persons of the crypto assets service provider;

3. intangible assets and rights of use relating to such assets (in essence, intangible assets), in the amount of the carrying value of capital investments made in them (including the revaluation result recorded in other comprehensive income), except for the assets specified in subparagraph 4 of this paragraph;

4. intangible assets, including software and rights to use them, solutions implemented to ensure information and cybersecurity (e.g. cryptography, tokenization), contactless technology programs (e.g. QR, NFC), remote identification technology programs, fraud detection programs, cloud services, as well as standards applied in the field of information technology and certification of their compliance (hereinafter referred to as “Software assets”), in the amount of the carrying value of capital investments made in them (including the result of revaluation recorded in other comprehensive income), to the extent that such amount exceeds 50 percent of the total capital elements. Moreover, for the purposes of the calculation specified in this subparagraph, the grand sum of the elements of total capital shall be reduced by the amount of other comprehensive income arising from the revaluation of Software assets;

5. the amount of the positive difference between the carrying amount of deferred tax assets and the carrying amount of the related deferred tax liabilities (net of tax assets). For the purposes of this subparagraph, deferred tax assets are those tax assets that arise from the inclusion of tax losses, resulting from activities carried out in accordance with the procedure established by Article 123(1)(4) of the Tax Code of the Republic of Armenia, in the elements deductible from gross income during the five tax years following the tax year in which those losses arose;

6. the carrying amount of investments made in the statutory capital of other organizations, in view of the circumstance referred to in subparagraph 7 of this paragraph;

7. the amount of investments made in the statutory capital of banks, other crypto assets service providers, investment firms, payment and settlement organizations, credit organizations, insurance companies, investment fund managers and in investment funds (hereinafter referred to as “financial institutions”), as a result of which the crypto assets service provider acquires 100 percent participation in the capital of the respective financial institution, and where the investment was made for the purpose of subsequently merging that institution with the crypto assets service provider and the Central Bank of Armenia has been notified of that intention it shall be deducted in the amount of their carrying value six months after the date of the investment.

13. The amount calculated in accordance with paragraph 11 of this Regulation shall be adjusted:

1. by derecognizing cash flow hedge reserves relating to assets/liabilities not carried at fair value, as well as hedging reserves for forecast cash flows, whereby the positive amount shall be deducted and the negative amount shall be added;
2. by derecognizing unrealized gains or losses resulting from changes in the fair value of liabilities carried at fair value due to changes in the own credit risk of the crypto assets service provider, whereby the positive amount shall be deducted and the negative amount shall be added.

CHAPTER 5

Calculation of Fixed Costs of Crypto Assets Service Providers

14. For the purpose of calculating the minimum total capital requirement established by this Regulation, the fixed costs of the crypto assets service providers shall be calculated on the basis of the annual financial statements for the previous reporting year (unless otherwise provided for in this Chapter), in particular on the basis of the annual financial statements approved by an independent auditor’s opinion. Where such an audit opinion is not available, the calculation shall be based on the financial statements for the fourth quarter submitted to the Central Bank of Armenia.

15. Where a crypto assets service provider has used financial statements not approved by an independent auditor’s opinion to determine fixed costs for the purpose of calculating the minimum total capital requirement established by this Regulation, and the annual financial statements approved by an independent auditor’s opinion subsequently become available, the crypto assets service provider shall be required to recalculate the amount of fixed costs used for calculating the minimum total capital requirement on the basis of the annual financial statements approved by an independent auditor’s opinion.

16. In the event a crypto assets service provider has not yet carried out activities for 12 months but has carried out activities for one month or more, then, in order to determine the amount of fixed costs for the previous reporting year, that crypto assets service provider shall:

1. divide the amount of fixed costs included in the financial statements available at the time of calculating the standard by the number of months for which the financial statements were prepared;
2. multiply the amount of fixed costs obtained as a result of the calculation referred to in subparagraph 1 of this paragraph by 12.

17. In the event a crypto assets service provider has carried out activities for less than one month, the planned fixed costs for the first reporting year shall be taken as the basis for determining the amount of fixed costs.

18. The amount of fixed costs shall be the sum of the following expenses:

1. salaries and other equivalents, as well as temporary disability and maternity benefits;
2. operating costs of premises, including rental payments;
3. insurance payments (including for cyber-risk (threats) insurance, professional liability insurance, property insurance and other risk insurance);
4. payments to external service providers (including the costs of audit, accounting, consulting and information services);
5. regular participation fees paid to trading platforms for concluding transactions on such platforms;
6. payments for server rental, Software assets and permanent cybersecurity services;
7. regular payments for data backup and recovery;
8. fees for maintaining and updating information security certification or costs for maintaining other information security standards;
9. fees related to servicing and safeguarding (custody) of bank, securities and crypto-asset accounts;
10. depreciation or amortization charges;
11. state duties;
12. expenses for the repayment of loans and borrowings, including debt instruments (payment of principal, interest and commissions);
13. tax expenses (extraordinary, non-recurring or unforeseen elements determining the amount of expenses shall not be included in the calculation); and
14. other administrative expenses not specified in this paragraph.

19. Non-recurring and unforeseen expenses related to the expenses specified in subparagraphs 2–14 of paragraph 18 of this Regulation shall not be included in the calculation of those expenses.

20. In the event the activities of a crypto assets service provider incurred a significant change during the current year, that crypto assets service provider shall be required to recalculate the fixed costs established by this Regulation (arithmetic mean of fixed costs for the previous months of the current year × 12) on the basis of the financial statements for the current year and revise the minimum total capital requirement calculated for the last reporting period. For the purposes of this paragraph, a change shall be considered significant if the total costs of the crypto assets service provider for the current year, as forecast for that year, have changed by at least 30%.

CHAPTER 6

Minimum Amount of Total Capital Triggering Revocation of the Crypto Assets Service Provider’s Activity License

21. In the event the minimum amount of total capital of a crypto assets service provider decreases by 10 (ten) percent or more below the established threshold under this Regulation, the activity license for providing crypto-asset services may be revoked by the Board of the Central Bank of Armenia.

Appendix 1

Principles for Inclusion of Crypto Asset Service Provider Profits in Total Capital

1. The retained earnings of a crypto assets service provider shall be the positive sum of the retained earnings or loss of the current period and the retained earnings or loss of previous periods.

2. The retained earnings of a crypto assets service provider shall be included in total capital in accordance with paragraph 3 of this Appendix, taking into account the requirement set out in paragraph 4 of this Appendix.

3. The retained earnings of a crypto assets service provider shall be included in total capital at the amount calculated according to the formula, as follows:

E = Earnings – PDP

where:

E – the amount of retained earnings included in total capital,

Earnings – the retained earnings at the moment of calculating total capital,

PDP – the amount of potential dividends payable during the given year, which is calculated according to the formula, as follows:

PDP = Max ((Earnings + DP) × Distribution rate – DP ; 0)

where:

DP – the amount of dividends already paid during the given year (if any).

The distribution rate shall be calculated according to the formula, as follows:

Distribution rate = Max (D-1 ; (D-1 + D-2 + D-3)/3)

where:

D-i (i = 1, 2, 3) – the distribution rate of the i-th year immediately preceding the given year, indicating what portion of the crypto assets service provider’s profit (the sum of the retained earnings of the crypto assets service provider as of the last day of the previous year and the net profit of the given year) was actually paid as dividends during the period from January 1st to December 31st of the i-th year.

4. If, after the distribution of dividends by the crypto assets service provider, the distributed amount is used to replenish the total capital element(s) of the crypto assets service provider (other than retained earnings or loss) before the end of the relevant distribution year, that amount shall be deducted from the amount of dividends actually paid when calculating the distribution rate referred to in paragraph 3 of this Appendix.