amynicole – The National Bank of Cambodia (NBC) has officially allowed commercial banks and payment firms to offer services involving specific cryptocurrencies. The National Bank of Cambodia announced on December 27 that banks can handle Category 1 crypto assets backed by fiat currencies.
According to the Phnom Penh Post, Category 1 assets include stablecoins such as USD Coin (USDC), Tether (USDT), and central bank digital currencies (CBDCs). These assets are recognized for their stability and close ties to traditional fiat currencies, making them more secure for financial transactions.
However, the NBC maintained its prohibition on standalone cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and other unbacked tokens. These cryptocurrencies, often characterized by high volatility and lack of direct fiat backing, remain off-limits in Cambodia.
The decision marks a significant step toward regulated crypto adoption in Cambodia. Reflecting a cautious approach to integrating digital assets into the financial system. By focusing on stablecoins and CBDCs. NBC aims to promote innovation while minimizing risks associated with unregulated and volatile cryptocurrencies.
Cambodia Permits Regulated Cryptocurrencies Services
Under new regulations issued by the National Bank of Cambodia (NBC). Commercial banks and payment firms can now offer crypto-related services, provided they obtain prior approval from the central bank. This marks a significant shift in Cambodia’s approach to cryptocurrency, aiming to balance innovation with financial stability.
Once authorized, banks and payment institutions can convert cryptocurrencies into fiat currencies and vice versa. Additionally, they can facilitate cryptocurrency transfers between accounts and provide secure custody services for digital assets. The new regulations aim to enhance the accessibility and utility of regulated cryptocurrencies within Cambodia’s financial ecosystem.
However, strict rules govern these activities to prevent misuse. Financial institutions are prohibited from using client crypto assets for their own benefit, ensuring higher transparency and safeguarding customer funds.
Before this policy shift, Cambodia had outright banned its citizens from conducting crypto transactions or trading cryptocurrencies. The earlier ban was driven by concerns over the high volatility of virtual assets and their potential use in illicit activities such as money laundering and fraud.
The new framework reflects Cambodia’s cautious yet progressive stance on cryptocurrencies. By requiring regulatory approval and restricting services to authorized entities. NBC aims to mitigate risks while enabling financial institutions to explore the benefits of blockchain technology and stablecoins.
This move opens up new opportunities for businesses and individuals, particularly in facilitating cross-border payments and enhancing financial inclusion. However, the ban on standalone cryptocurrencies like Bitcoin and Ethereum remains. Underscoring the country’s commitment to controlling volatility and preventing financial crime.
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Cambodia Takes Measured Steps Toward Crypto Adoption, Blocks Unlicensed Exchanges
Cambodia is gradually embracing the crypto industry, reflecting a global trend seen in nations like Hong Kong, the U.S., and the UAE. However, the country remains in the early stages of its cryptocurrency journey compared to these more advanced markets.
In a significant move this month, Cambodia blocked 16 major crypto exchanges, including Binance, OKX, and Coinbase, for failing to secure necessary licenses from the Securities and Exchange Regulator. Licensing is mandatory for any exchange wishing to operate legally within the country. This strict enforcement underscores Cambodia’s cautious approach to cryptocurrencies, focusing on regulation to ensure market stability and compliance.
Despite its wariness of standalone cryptocurrencies, Cambodia appears to be exploring the potential of digital currencies pegged to fiat, such as stablecoins. This aligns with the National Bank of Cambodia’s efforts to modernize the financial system while minimizing risks associated with volatile crypto assets.
In May, NBC Governor Chea Serey expressed optimism about the role of digital currencies in strengthening the Cambodian riel and reducing dependence on the U.S. dollar. These steps highlight the nation’s strategic interest in integrating blockchain technology into its financial ecosystem while prioritizing stability and control.
Cambodia’s incremental adoption of crypto mirrors a global shift toward digital currencies, with nations taking diverse approaches to regulation and implementation. By focusing on compliance and emphasizing stablecoin adoption, Cambodia positions itself as a measured participant in the evolving crypto landscape.
As Cambodia continues to block unlicensed operators and regulate digital currencies, the nation’s cautious but forward-looking policies could pave the way for broader adoption of regulated crypto services, bolstering its financial independence and innovation.
