Regulatory And Legislative Challenges In Armenia's Fintech Ecosystem

<jats:p>The rapid evolution of Armenia's fintech sector offers significant economic opportunities but is constrained by outdated legislation, fragmented institutional oversight, and restrictive licensing procedures. This study examines the core regulatory challenges impeding the sustainable development of Armenia’s fintech ecosystem and proposes actionable legislative reforms. Employing a qualitative research design, the methodology combines doctrinal analysis of primary legal texts, including the Law on Banks and Banking Activity and the newly enacted Law on Crypto-Assets (2026), with a comparative analysis of international frameworks such as the EU’s MiCA and the UK’s FCA regulatory sandbox. The findings reveal that while recent legislative efforts mark progress in AML and crypto-asset oversight, the prevailing rigid legal structure fails to accommodate dynamic digital financial services. Fragmented jurisdictions between the Central Bank, Ministry of Finance, and data protection agencies create compliance bottlenecks, while underdeveloped regulatory sandboxes stifle startup innovation. To resolve these inefficiencies, this study proposes a proportional, three-tiered licensing system tailored to the risk profiles of micro-enterprises, SMEs, and large fintech firms. Furthermore, it advocates for statutory amendments to legally empower the Central Bank to grant temporary regulatory relief for sandbox participants. By aligning domestic policies with international best practices and implementing risk-based, scalable regulations, Armenia can overcome existing institutional barriers, balance innovation with robust consumer protection, and unlock its full potential as a competitive global fintech hub.</jats:p>