The National Bank of Cambodia (NBC) is now allowing commercial banks and payment institutions to use certain “Class 1” assets like stablecoins, especially those backed by substantial fiat assets. However, the country has still banned Bitcoin.
This development may help create growth for the nation’s nascent blockchain space, but a real transformation will require more extensive crypto-friendly policies.
Cambodia Friendly to Stablecoins?
According to local reports, this new move seems like a positive step for the regulation of stablecoins in Cambodia, but the state is clearly skeptical of crypto. Hong Vanak, an economic researcher at the Royal Academy of Cambodia, highlighted this dynamic.
“Cryptocurrencies do not bring many benefits to the national economy due to their digital and decentralized nature, and even complicate management, taxation, and ownership tracking. [However], giving the green light to crypto services can bring in large revenues from user transaction fees for commercial banks and financial institutions, Vanak claimed.
Crypto regulation in Cambodia has become stricter throughout 2024. For example, the country blocked 16 major international exchanges earlier this month.
However, the national bank hasn’t always been this hostile; it previously launched a CBDC and deployed cross-border payment transfers. Yet, growing concerns about money laundering have made the regulators scrutinize digital assets more. Now, its acceptance of stablecoins is the best news for crypto in Cambodia.
Over the past two years, crypto adoption has grown in the country. However, much of this is associated with organized crime, creating a negative stigma.
For example, researchers uncovered an $11 billion darknet trade running through Cambodia earlier this year, which even involved the President’s extended family. Tether subsequently froze much of these assets.
This darknet market was even linked to laundered money from the infamous North Korean Lazarus Group, further deepening the scandal. In recent years, Cambodian regulators have worked with firms like Binance to build positive regulation.
Although it’s good that Cambodia is approving stablecoins, it may take time to extend this to the broader crypto sector.
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