Cambodia and Cryptocurrency
Digital Currencies Laws: Cryptocurrency, Bitcoins, Blockchain Technology
Cambodia has announced that it will release a government-backed digital currency. Named “Project Bakong,” projects has been described as developing a “blockchain-based, peer-to-peer payment and money transfer platform.” The project is designed to explore the use of an alternative technology platform to further enhance the payment system in Cambodia and promote use of the Cambodian Riel (“KHR”).
Nonetheless, virtual currencies are not currently defined or regulated under Cambodian law. Cambodia generally regulates electronic money pursuant to Prakas No. B14-107-161 on the Management of Payment Service Provider. However, its provisions are not specifically targeted to cryptocurrencies.
Previously, the National Bank of Cambodia, the Securities and Exchange Commission of Cambodia and the General-Commissariat of National Police in Cambodia released a joint statement providing that “the propagation, circulation, buying, selling, trading and settlement of Crypto Currencies without obtaining license from competent authorities are illegal activities.” The joint statement further warned that:
The propagation, circulation, buying, selling, trading and settlement of Crypto Currencies such as KH Coin, Suncoin, K coin, One-coin, Forex coin and other similar Crypto Currencies which are not regulated by competent authorities will cause potential risks to the publics and society as a whole as the following:
– The issuance of Crypto Currencies is not backed by collateral
– Investment in Crypto Currencies may incur losses due to volatility of its face value.
– Facing cybercrime and losses of funds due to the system being hacked
– There is no customer protection mechanism and the user of Crypto Currencies is an anonymous person who has no identity or historical records, which may cause risks of money laundering and financing of terrorism.
In this stage, the competent authorities appeal that the publics be cautious of the propagation to mobilize funds and the operations of buying, selling, trading and settlement of CryptoCurrencies without obtaining a license from competent authorities.
Any person or legal entity that propagates to mobilize funds, buys, sells, trades or settles Crypto Currencies without obtaining license from competent authorities shall be penalized in accordance with applicable laws.
Cambodia Virtual Currency Laws And Agreements
The National Bank of Cambodia (NBC) “signed an agreement with a Japanese firm . . . to develop a blockchain-based project for its own internal use, which would track interbank lending and transactions” in April 2017. However, it only addresses interbank transactions.
As early as 2016, the National Bank of Cambodia established a working group to explore the use of blockchain and distributed ledger technology (“DLT”) in payment systems. By early 2017, the group had developed use-cases under the auspices of Project Bakong. The project’s name, Bakong, derives from a prominent Khmer temple from 9th century whose architecture was replicated to build Cambodian Independent Monument in 1958.
Nonetheless, currently, the legal status of virtual currencies in Cambodia remains ambiguous.