Cambodia allows stablecoin services with NBC approval, while Bitcoin remains prohibited. The move aims to integrate secure cryptocurrencies.
The National Bank of Cambodia (NBC) has made a major move in the crypto space. NBC said for the first time it will allow commercial banks and payment institutions to offer services relating to Category 1 crypto assets. These cryptocurrencies are secured or stable cryptocurrencies, like stablecoins. However, unsecured cryptocurrencies, like Bitcoin, are still banned.
The NBC announced the decision, made on prakas on December 26. It directs the use of digital currencies in a country. This is an indication of Cambodia’s attempts to go with the stride of global financial innovation.
They are cryptocurrencies, or digital currencies, not controlled by central banks. They do things through decentralized networks called blockchains instead. Other currencies are picking up around the world. They are used for trading, transfers, payments, and investments. They can buy goods and services online too.
Banks Can Now Offer Crypto Services in Cambodia with NBC Approval
The new instruction requires any commercial bank or payment institution that wishes to provide crypto services to get its approval from the NBC first. Once approved, the institutions can trade crypto assets to fiat currencies. They can further transfer crypto tokens between accounts and provide custody services. Yet they cannot use customers’ crypto assets for their benefit.
To add on, earlier, Cambodia banned cryptocurrency transactions and trading. The government has said cryptocurrencies are riddled with high risks of money laundering, fraud, and activities in the black market.
An economic researcher at the Royal Academy of Cambodia, Hong Vanak spoke of the role of cryptocurrencies. According to him, besides payment, cryptocurrencies are now also used for more. Because of their volatile prices, they are also traded like stocks. But Vanak says cryptocurrencies add little to Cambodia’s economy. They are decentralized which makes them hard for government to tax, regulate and track ownership, he said.
However, Vanak said that banks and crypto services providers can still make profits. By offering exchange and custody services they could derive revenue from user fees.
Finally, the NBC began to open the way to the services of stablecoin in Cambodia. Bitcoin and other unbacked cryptocurrencies are, however, banned. As Cambodia works to integrate digital currencies within its financial system, while tackling security and regulation concerns this is an important step.
