In the latest development, The National Bank of Cambodia has approved compliant stablecoin services but bans unbacked assets like BTC. 

The Central Bank of Cambodia now allows commercial banks and payment institutions to provide services involving Category 1 cryptocurrencies, i.e., backed or stable cryptocurrencies. However, unbacked cryptocurrencies, such as Bitcoin, remain prohibited.

The development was formalized in a prakas issued on December 26 and announced by NBC on December 27 as reported by The Phnom Penh post. The directive aims to regulate operations and businesses involving digital currencies, reflecting the country’s effort to keep pace with global financial innovations.

Under the new directive from the National Bank of Cambodia (NBC), commercial banks and payment institutions must obtain prior approval to offer crypto-related services. Authorized institutions can engage in activities such as exchanging crypto assets for fiat currencies, transferring crypto between accounts, and providing custody services. However, they are explicitly prohibited from using their customers’ crypto assets for their own purposes.

Historically, Cambodia has banned cryptocurrency transactions and trading due to concerns about high risks, including money laundering, fraud, and illicit activities in the black market.

Economic researcher Hong Vanak of the Royal Academy of Cambodia noted the growing global popularity of cryptocurrencies, which are used not only for payments but also traded like stocks due to their highly volatile prices, particularly unbacked cryptocurrencies.

Vanak argued that cryptocurrencies provide limited benefits to Cambodia’s national economy due to their digital and decentralized nature, which makes regulation, taxation, and ownership tracking challenging. However, he acknowledged that commercial banks and institutions offering crypto asset services could generate revenue through user fees.