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What is the legal status of Cryptocurrency in Cambodia?
While cryptocurrencies boomed and became very popular in the West in their early days, they sometimes caused panic for governments who found it difficult to fit them into existing legal frameworks. Emerging countries on the other hand have have began to embrace cryprocurrencies and taken the lead in formulating regulations and frameworks.
Cambodia has a young and enthusiastic population for digital innovation. This, combined with steady economic growth, has created a promising market for fintech solutions. The Cambodian government has also implemented one of the worlds first blockchain-based Central Bank Digital Currencies (CBDC) named Bakong which has reached about half the country’s population (7.9 million)
But when it comes to cryptocurrency activities, the legality of the operations remains unclear although the country does have a solid user base and many crypto enthusiasts.
Are cryptocurrencies regulated in Cambodia?
As for now there is no regulatory framework for cryptocurrencies in Cambodia. In 2017, the authorities (National Bank of Cambodia) issued an official statement (Prakas) on the management of payment service providers. This statement mainly aims to manage and define the legal procedures on licence applications for legal entities that provide payment services in Cambodia. However, it does not appear that cryptocurrencies fall within the scope of this regulation, making them legally undefined.
What is the Cambodian governments current position on cryptocurrencies?
The current lack of regulation in the area of cryptocurrencies has led various regulatory entities to issue a joint statement for the first time in 2018 to clarify the government’s view on crypto-currency activities and to warn the public of the potential risks when engaging in such transactions.
The main conclusion of this statement is that, from the government’s point of view, all cryptocurrency transactions are subject to prior business licensing, regardless of the legal status of the person engaging in them. The endnote to the document is a warning to those who decide to break these rules, reminding them that violators are subject to criminal sanctions.
This straightforward position was reaffirmed most recently at the National Consultative Workshop on Cambodia’s Financial Policy and Technology Directions, where it was recalled that no commercial licences have yet been granted in the Kingdom.
What are the risks for cryptocurrency transactions in Cambodia?
Public statements have been reiterating the need to obtain a licence to conduct cryptocurrency activities, but in the absence of a regulatory or licensing regime from the authorities, it may be difficult to know where to start and to what extent legal advice should be sought.
From a litigation perspective, the extent and severity of the sanctions that might apply in Cambodia is unknown as there do not appear to be any significant cases on this issue.
In conclusion
The legal climate around cryptocurrencies in Cambodia is particularly unclear. However, Cambodia has been experiencing rapid growth of FinTech sector and the implementation of the aforementioned Bakong project does show a willingness to embrace cyrptocurrencies.
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