National Bank Of Cambodia Approves Stablecoin Services

By Anthony • December 27, 2024 9:14 am • Comments

The National Bank of Cambodia has approved stablecoin services for cryptocurrencies such as USD Coin and Tether.

The bank, however, will not approve services for unbacked assets such as Ethereum and Bitcoin.

Under the Cambodian government’s new rule, commercial banks must obtain approval before offering services.

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Per Coinpedia:

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.

Here’s what Crypto.News reported:

According to the Phnom Penh Post, the NBC formally declared the decision to allow banks to provide services involving Category 1 crypto assets on Dec. 27. Category 1 crypto asset are cryptocurrencies backed by fiat, including stablecoins such as USD Coin and Tether as well as central bank digital currencies.

Though, this also means that Bitcoin, Ethereum and other standalone cryptocurrencies are still prohibited in Cambodia.

Under this new law, all commercial banks and payment firms must first receive approval from the central bank if they want to provide crypto-related service. Once they are authorized, banks and payment institutions can convert crypto into fiat currencies and vice versa. They will also be allowed to facilitate cryptocurrency transfers between accounts and provide custody services.

However, financial institutions are strictly prohibited from using client’s crypto assets for their own benefit.

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