Cambodian Central Bank Approves Stablecoins, Maintains Bitcoin Ban

The National Bank of Cambodia (NBC) has taken an important step by allowing commercial banks and payment institutions to offer services related to Category 1 cryptoassets, which include stable and backed cryptocurrencies. This is the first time that NBC has allowed this type of operation, following a directive issued on December 26 and officially announced on December 27, as reported by the Phnom Penh Post. However, unbacked digital currencies, including bitcoin, remain prohibited under the new framework.

Regulation of digital currencies in Cambodia

The directive is part of Cambodia's effort to regulate digital currencies and align with global financial trends. Under the new rules, financial institutions must obtain prior approval from the NBC before providing services involving crypto assets. Approved institutions will be able to exchange cryptocurrencies for fiat money, facilitate transfers of crypto assets between accounts, and offer custody services. However, these entities are explicitly prohibited from using clients' crypto assets for their benefit.

Cambodia has historically taken a cautious stance toward cryptocurrencies due to concerns about potential risks, including fraud, money laundering, and other illicit activities. These concerns previously led to bans on cryptocurrency trading and transactions within the country.

In May, Chea Serey, governor of the National Bank of Cambodia, shared optimism about the potential of digital currencies. He highlighted that such currencies could strengthen the Cambodian riel and reduce dependence on the US dollar. This sentiment aligns with NBC's measured approach to embracing stablecoins while maintaining a firm stance against speculative and unregulated cryptocurrencies.

<blockquote class="twitter-tweet” data-width=”550″ data-dnt=”true” wp_automatic_readability=”8.4712643678161″>

Cambodia has allowed commercial banks and payment institutions to offer services involving Category 1 cryptoassets, such as backed or stablecoins.<a target="_blank" href="https://twitter.com/hashtag/Cambodia?src=hash&ref_src=twsrc%5Etfw”>#Cambodia <a target="_blank" href="https://twitter.com/hashtag/Regulation?src=hash&ref_src=twsrc%5Etfw”>#Regulationhttps://t.co/DwAHt2nE6r

– Criptonoticias.com (@cryptonews) <a target="_blank" href="https://twitter.com/cryptonews/status/1872608855659848102?ref_src=twsrc%5Etfw”>December 27, 2024

Expert Opinions on Cambodia crypto Regulation

Economic researcher Hong Vanak of the Royal Academy of Cambodia They shared insights on the complexities of regulating cryptocurrencies. He noted that the decentralized nature of digital currencies complicates efforts to track, tax and control these assets. According to Vanak, while cryptocurrencies may offer limited direct benefits to Cambodia's economy, institutions providing cryptocurrency-related services could generate revenue through user fees.

Crackdown on crypto Exchanges

In a related development earlier this month, Cambodia blocked access to 16 cryptocurrency exchange websites, including major platforms such as Binance, Coinbase, and OKX. This measure was part of a broader initiative to regulate the digital asset market and enforce local laws. The action, based on a directive signed by the acting chairman of the Telecommunications Regulator of Cambodia (TRC), Srun Kimsann, targeted 102 domains, most of which were associated with online gambling. The targeted crypto exchange websites lacked the necessary licenses from the Securities and Exchange Regulator of Cambodia (SERC).

Although access to these websites has been restricted, the platforms' mobile applications remain operational. Currently, only two companies are licensed under SERC's “FinTech Regulatory Sandbox” program. While these companies can trade digital assets, they are not authorized to exchange cryptocurrencies for Cambodian riel or other fiat currencies.

Cambodia's crypto Landscape

Despite the strict measures, Cambodia remains a leader in retail cryptocurrency usage per capita, according to analytics firm Chainalysis. Centralized exchanges account for approximately 70% of the country's crypto transactions. However, Cambodia's crypto activities have faced international scrutiny due to concerns about criminal misuse.

The United Nations Office on Drugs and Crime (UNODC) highlighted the use of cryptocurrencies by criminal organizations in Cambodia for activities such as money laundering and dark web transactions. Additionally, Chainalysis data revealed that Huione Guarantee, an exchange associated with Cambodian conglomerate Huione Group, facilitated more than $49 billion in cryptocurrency transactions between 2021 and mid-2024.

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