In a historic move, the National Bank of Cambodia (NBC) has authorized commercial banks and payment institutions to handle specific cryptocurrency services, marking the country's first step into regulated digital assets.
The new directive, announced on December 27, permits operations involving Category 1 crypto assets, which include backed or stable cryptocurrencies. However, the regulation maintains a strict ban on unbacked cryptocurrencies like Bitcoin.
Under the new framework, financial institutions must obtain explicit approval from NBC before offering any crypto-related services. Approved institutions can facilitate currency exchanges between crypto and traditional currencies, manage transfers between crypto accounts, and provide custody services for digital assets.
The directive includes strong consumer protection measures, explicitly prohibiting institutions from using customer crypto assets for their own purposes. This safeguard aims to protect investors and maintain financial stability.
This regulatory shift represents a notable change in Cambodia's stance toward digital currencies, as the country previously banned all cryptocurrency transactions and trading due to concerns over money laundering, fraud, and illegal activities.
Hong Vanak, an economic researcher at the Royal Academy of Cambodia, points out that while cryptocurrencies have gained worldwide popularity for both payments and trading, their impact on Cambodia's national economy may be limited. The digital and decentralized nature of these assets presents challenges for regulation, taxation, and ownership tracking.
The new framework suggests a carefully balanced approach by Cambodian authorities, allowing innovation in financial services while maintaining strict oversight of digital asset operations.
Banks and payment institutions operating under the new regulations are expected to generate revenue through service fees, creating a new regulated segment in Cambodia's financial sector.