Various types of cryptocurrencies. World Economic Forum
For the first time, the National Bank of Cambodia (NBC) has allowed commercial banks and payment institutions to provide services involving Category 1 crypto assets, including backed or stable cryptocurrencies. However, unbacked cryptocurrencies, such as Bitcoin, remain prohibited.
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The development was formalised in a prakas issued on December 26 and announced by NBC on December 27.
The directive aims to regulate operations and businesses involving digital currencies, reflecting the country’s effort to keep pace with global financial innovations.
Cryptocurrencies are digital assets or currencies not controlled by central banks but operate through decentralised computer networks, known as blockchains. These assets are increasingly used worldwide for trading, transfers, payments and investments in goods and services via digital platforms.
Under the directive, all commercial banks or payment institutions wishing to provide crypto-related services must seek prior approval from NBC. Institutions granted authorisation can engage in activities such as exchanging crypto assets for fiat currencies or vice versa, transferring crypto assets between accounts and providing custody services for crypto assets. However, they are explicitly prohibited from using their customers’ crypto assets for their own purposes.
Historically, Cambodia has banned cryptocurrency transactions and trading due to the associated high risks, including money laundering, fraud and illicit activities within the black market.
Economic researcher Hong Vanak of the Royal Academy of Cambodia acknowledged the growing global popularity of cryptocurrencies, which are used not only for payments but also traded like stocks due to their highly volatile prices, particularly unbacked cryptocurrencies.
Vanak, however, argued that cryptocurrencies offer limited benefits to the country’s national economy due to their digital and decentralised nature, which complicates regulation, taxation and ownership tracking. He noted, however, that commercial banks and institutions offering crypto asset services could generate revenue through user fees.
