Cambodia’s Central Bank Endorses Stablecoins but Omits Bitcoin in Latest Policy Update

Highlights:

• Cambodia’s Central Bank has released a new policy that allows commercial banks and other financial firms to offer digital assets services.
• The new law permits transacting stable or backed cryptocurrencies while excluding unbacked tokens like Bitcoin.
• Financial firms must receive an operational permit from the NBC before offering customers crypto assets services.

The National Bank of Cambodia (NBC) has approved commercial banks and other financial firms to expand its services to include Category 1 crypto assets, including stable or backed cryptocurrencies. However, the fresh policy contained a notable exclusion for unbacked cryptocurrencies like Bitcoin (BTC) and several other altcoins.

📢 JUST IN: NATIONAL BANK OF CAMBODIA APPROVES COMPLIANT STABLECOIN SERVICES, PROHIBITS UNBACKED ASSETS LIKE $BTC

— BSCN Headlines (@BSCNheadlines) December 27, 2024

Hence, the pronouncement implies that Bitcoin remains prohibited in the region amid the global clamor for states-owned strategic Bitcoin reserves. Meanwhile, it is worth noting that the fresh directive appeared in one of “the Phnom Penh Post” publications. It stated that the new policy was the first-ever for the Southeast Asian nation. Therefore, chances abound that NBC would likely review the policy to accommodate more digital assets.

Cambodia Aims to Meetup with Its Peers in the Global Economic Landscape

With the latest directive, Cambodia aims to attain equal status with other nations amid global economic reforms. The Southeast Asian country is renowned for its past unfavorable crypto regulations. Notedly, Cambodia envisaged digital assets as avenues for facilitating illicit financial crimes like money laundering and terrorism funding.

However, after reviewing its stance and possibly discovering that its unfavorable crypto disposition has done more harm than good, the NPC stepped up with a new policy. The publication stated: “The directive aims to regulate operations and businesses involving digital currencies, reflecting the country’s effort to keep pace with global financial innovations.”

Still, in the same announcement, NBC acknowledged cryptocurrencies’ role in revolutionizing the payment landscape despite lacking central control. Per the publication, these digital assets are gaining relevance in offsetting payments and investments in goods and services via digital outlets.

Conditions for Offering Digital Assets Services

According to NBC’s new directive, commercial banks and other financial outlets interested in offering digital assets services must obtain approval from the National Bank. The endorsement allows qualified platforms to partake in exchange trades like swapping crypto for fiat currencies.

In addition, NBC’s approval allows financial institutions to transfer cryptocurrencies between accounts, which implies providing custody services for crypto assets. Meanwhile, as part of restrictions to protect customers’ valuables, the new policy prohibits financial firms from using digital assets under their custody for personal deals, like investments.

NATIONAL BANK OF CAMBODIA APPROVES STABLECOINS AND BACKED ASSETS, PROHIBITS BITCOIN

– The National Bank of Cambodia (NBC) has approved using stablecoins and other backed assets by commercial banks and payment institutions.

– According to the Phnom Penh Post, this is the first… https://t.co/iZckEZHLnb pic.twitter.com/pKZQwbbkBX

— BSCN (@BSCNews) December 27, 2024

Economic Researcher Wades in On Digital Assets Roles and Economic Impacts

Reacting to the new development, Hong Vanak, an Economic Researcher, acknowledged the growing significance of cryptocurrencies in enhancing most payment processes. According to him, the volatile nature of digital assets, especially unbacked cryptocurrencies, made them ideal options for trading stocks. In addition, commercial banks and other financial firms offering crypto services could generate revenue via users’ transaction charges.

However, he argued that while crypto might offer the uniqueness above, he does not see the economic benefits. The researcher asserted: “Cryptocurrencies offer limited benefits to the country’s national economy due to their digital and decentralized nature, which complicates regulation, taxation, and ownership tracking.”