Commercial banks and payment companies can offer cryptocurrency-related services by the National Bank of Cambodia, but not for Bitcoin or other unbacked tokens.Â
The Phnom Penh Post reports that on December 27, the NBC publicly announced its decision to permit banks to offer services involving Category 1 crypto assets.
Cryptocurrencies backed by fiat, such as central bank digital currencies and stablecoins like USD Coin and USDT, are classified as category 1 assets.
However, this also implies that solo cryptocurrencies like Bitcoin, Ethereum, and others are still illegal in Cambodia.
According to this new rule, any commercial bank or payment company that wishes to offer services related to cryptocurrencies must first obtain central bank clearance.
Banks and other payment institutions can convert cryptocurrency into fiat money and vice versa once they are approved.
They can also offer custody services and facilitate cryptocurrency transactions between accounts. Financial institutions, however, are not allowed to use their clients’ cryptocurrency assets for personal gain.
Due to the significant volatility of virtual assets and the generally held belief that cryptocurrency encourages illegal activities, including money laundering and fraud, Cambodia has prohibited its nationals from engaging in cryptocurrency transactions or trading before the NBC announcement.
This historic action shows that Cambodia is gradually moving toward the cryptocurrency sector, following a global trend observed in nations like the United States, Hong Kong, and the United Arab Emirates.Â
However, Cambodia is still in its infancy compared to other nations. 16 significant cryptocurrency exchanges, including Binance, OKX, and Coinbase, were prohibited by Cambodia earlier this month.
The exchanges could not obtain the licenses required to operate in Cambodia from the Securities and Exchange Regulator.
Although the country is still wary of cryptocurrencies generally, Cambodia is moving toward fiat-based digital currencies.
Chea Serey, the governor of the National Bank of Cambodia, voiced hope in May that digital currency will fortify the Cambodian riel and lessen the need for the US dollar.
