The National Bank of Cambodia (NBC) has slightly relaxed its strict rules on cryptocurrencies. From now on, banks and payment service providers are allowed Stablecoins use backed by fiat currencies. Cryptocurrencies like Bitcoin, Ethereum or other uncollateralized tokens, however, remain illegal.
With these new ones Crypto regulations Cambodia aims to minimize the risks of cryptocurrencies while at the same time opening the way to digital financial technologies. Stablecoins such as USD Coin (USDC) and Tether (USDT) can now officially be offered and used as long as they meet the central bank’s requirements.
Stablecoins as an exception to the ban
Since 2017, Cambodia has had strict laws prohibiting any use of cryptocurrencies. The government feared that digital currencies could encourage illegal activities such as money laundering and fraud. In addition, the high volatility of many cryptocurrencies led to skepticism.
With the new rules, NBC now allows the use of so-called category 1 crypto assets for the first time. This includes stablecoins that are directly linked to fiat currencies such as the US dollar. These coins are considered less volatile and are therefore safer for financial institutions.
New opportunities for banks and companies
According to NBC Banks and payment service providers are allowed to use stablecoins for various services. This includes converting stablecoins into fiat currencies and vice versa, as well as custody of stablecoins for customers. Transactions between stablecoin accounts can also be offered.
However, any institution wishing to provide such services must first obtain a license from the Central Bank. The government attaches great importance to security and transparency. Banks and payment companies are not allowed to use their customers’ stablecoins for their own purposes.
Cryptocurrencies remain problematic
The NBC makes it clear that this relaxation should not be understood as a general opening for cryptocurrencies. Bitcoin, Ethereum and other unsecured tokens remain strictly prohibited. The government continues to see these currencies as high risk.
As recently as December, Cambodia had 16 international ones Crypto exchanges like Binance, Coinbase and OKX blocked. These platforms were unable to obtain the necessary licenses from the securities regulator. Access to international crypto markets is therefore severely restricted for users in Cambodia.
Why stablecoins are now allowed
The decision to allow stablecoins could be related to the Cambodian government’s long-term plans. Governor Chea Serey said in May that digital currencies could help strengthen the Cambodian riel and reduce dependence on the US dollar.
By developing its own central bank digital currency (CBDC), Cambodia could embark on a path that has similarities to countries such as China or the United Arab Emirates. Opening up to stablecoins could be a first step in this direction.