Cambodian Government Allows Banks to Offer Stablecoin Services
The Cambodian government is shifting its stance on cryptocurrencies, allowing commercial banks and payment institutions to offer services involving Category 1 crypto assets. This decision was formalized by the National Bank of Cambodia (NBC) through a directive issued on December 26.
The directive permits approved institutions to engage in activities such as exchanging cryptocurrencies for fiat, transferring crypto assets, and providing custody services. However, unbacked cryptocurrencies like Bitcoin and Ethereum remain prohibited under this framework.
Step Toward Regulation and Innovation
Category 1 crypto assets, as defined by NBC, include backed or stable cryptocurrencies that maintain a fixed value tied to reserve assets such as USDT and USDC. This distinction aims to reduce risks associated with volatility and illicit use linked to other cryptocurrencies.
The directive established operational guidelines for financial institutions entering the crypto space. Institutions must obtain prior approval from NBC before engaging in any crypto-related activities. Authorized entities can facilitate the exchange of backed crypto assets, enable account-to-account transfers, and store crypto assets for customers. However, they are prohibited from using customers’ crypto assets for their own purposes.
This move reflects Cambodia’s attempt to balance financial innovation with oversight to mitigate risks such as fraud and money laundering.
Cambodia’s Historical Stance on Cryptocurrencies
Historically, Cambodia has been skeptical of cryptocurrencies, previously banning transactions and trading due to perceived risks. Earlier this month, the country’s financial regulator blocked access to 16 digital asset trading platforms, including major exchanges like Binance, Coinbase, and OKX, due to lack of proper licensing.
Currently, only two crypto exchanges are fully authorized to operate in Cambodia. Economic researcher Hong Vanak noted the growing global adoption of cryptocurrencies but emphasized challenges related to regulation, taxation, and ownership tracking. Despite these challenges, he acknowledged that financial institutions offering crypto services could create new revenue streams through user fees.