Cambodia allows commercial banks to offer cryptoasset services

But unbacked cryptoassets are now allowed.

Cambodia has officially embraced cryptoassets, allowing commercial banks and payment services to obtain authorization to become cryptoasset service providers (CASPs).

However, algorithm-based and unbacked cryptoassets and stablecoins are still not allowed.

Under a prakas— or an official proclamation— the National Bank of Cambodia (NBC) outlined new rules of cryptoasset transactions, including classifying cryptoassets into two groups.

Group 1 are cryptoassets that are “digital representation of traditional financial instruments,” such as assets that have been tokenized, like securities.

This also includes stablecoins that have a stabilization mechanism or assets that maintain a stable value, excluding algorithm-based stablecoins.

Group 2 are cryptoassets that are unbacked and are neither tokenised traditional assets nor stablecoins.

Commercial banks are not allowed to carry out any transactions, directly or indirectly, on cryptoassets that fall under Group 2. Banks are also prohibited from issuing their own cryptoassets.

Approved CASPs may exchange cryptoassets, transfer cryptoassets, or safekeep or administer cryptoassets or instruments enabling the control of such assets.

CASPs are barred from using a customer’s cryptoassets for their own business purposes, and facilitating lending and staking of their customers’ cryptoasset.

They are also not allowed to provide any service that will promote, support, or encourage cryptoasset use as a means for payments.

They also may not advertise specific cryptoassets, although they may advertise their own services.

Application
Banks interested in becoming CASPs must first obtain approval from the central bank.

They are required to exhibit “strong financial conditions” and must comply with prudential regulations. They will also be required to provide a designation of the cryptoassets, and a detailed assessment of their classification in Group 1.

Other requirements include a business plan, a governance and risk management framework, and proper legal due diligence of cryptoasset arrangements.

The NBC will provide written notification on its decision within 60 working days from the date of receipt of submission, with sufficient documents.