The National Bank of Cambodia (NBC) has taken a decisive step in shaping the nation’s cryptocurrency landscape. On December 27, 2024, the central bank announced its approval for Category 1 stablecoin services offered by commercial banks and payment institutions, while simultaneously prohibiting the use of unbacked cryptocurrencies like Bitcoin.
A Green Light for Stablecoins
Stablecoins, often pegged to traditional fiat currencies, have gained approval from the NBC under strict regulatory guidelines. These digital assets, considered less volatile than cryptocurrencies like Bitcoin, will now be accessible through authorized banks and payment service providers.
The NBC’s decision reflects a pragmatic approach to harnessing the benefits of blockchain technology while minimizing associated risks. By allowing stablecoins, Cambodia aims to promote financial inclusion, enhance cross-border remittances, and streamline digital payments within its economy.
Approved stablecoin services fall under the “Category 1” classification, ensuring they meet compliance standards for anti-money laundering (AML) and counter-terrorism financing (CTF). Service providers are required to implement stringent Know Your Customer (KYC) protocols, ensuring a secure and regulated environment for users.
Why Bitcoin and Other Cryptocurrencies Are Banned
In contrast to its approval of stablecoins, the NBC has imposed a complete ban on unbacked cryptocurrencies such as Bitcoin, Ethereum, and other volatile digital assets. The central bank cited concerns over their speculative nature, potential for financial instability, and vulnerability to illicit activities.
Cambodia’s decision aligns with its cautious stance toward cryptocurrency adoption. By prohibiting unregulated digital currencies, the NBC aims to safeguard its monetary system while maintaining control over the nation’s financial ecosystem.
Implications for the Cambodian Economy
The introduction of regulated stablecoin services is expected to revolutionize Cambodia’s financial landscape. With a significant portion of the population still unbanked, these services could offer a gateway to modern financial tools, driving greater participation in the digital economy.
The ban on Bitcoin and similar cryptocurrencies, however, may limit opportunities for those seeking decentralized financial solutions. For blockchain enthusiasts and crypto investors, this decision underscores the challenge of navigating diverse regulatory environments.
As Cambodia takes this bold step, the nation positions itself as a forward-thinking player in the digital finance space, leveraging stablecoin technology to drive innovation while maintaining regulatory oversight.
