The Outlooker 06

Cambodia launches its own CBDC in a controversial move, despite declaring crypto-related activities illegal for citizens without licenses.

The Promontory

The Cambodian government has refused to recognize the value of cryptocurrencies since 2018. The national bank, securities and exchange commission, and the General-Commissariat of National Police all declared that the buying, selling, and trading of cryptocurrencies without a license is strictly illegal. Cambodia has held this stance against unsanctioned crypto activities, and has been arresting citizens who commit crypto fraud. However in a controversial move, the government launched their own "Bakong" digital currency that is linked to fiat within central banks to decrease volatility in the economy.

License needed for crypto trading in Cambodia

In 2018, Cambodian authorities reported that the circulation or trading of cryptocurrencies without a proper license is prohibited. Any entity or individual that engages in buying, selling, trading, or settling in cryptocurrencies without a licensing will be penalized in accordance with applicable laws. This joint statement was planned and executed by three large groups: the National Bank of Cambodia, the General-Commissariat of National Police, and the Securities and Exchange Commission of Cambodia. The government rejects the relevance of cryptocurrencies, and has undertaken strict steps to prevent the use of decentralized digital coins.

The Securities and Exchange Commission (SEC), has continuously warned citizens of the dangers of being involved in crypto without a solid regulatory framework. In 2018, a directive was issued by the National Bank of Cambodia (NBC), which stated that microfinance institutions and banks are banned from advertising and trading cryptocurrencies. The statement cites the lack of consumer protection, cybercrime, and loss of funds due to hacking brought about by crypto. The government agrees that cryptocurrencies still serve as a threat despite making moves towards a Central Bank Digital Currency (CBDC).

Government reiterates stance against unsanctioned crypto activities

In April 2022, the Cambodian government announced that no businesses had acquired a crypto license yet. The China News Service report revealed that Cambodia is in its initial reviewing stages for a fintech development policy. The Ministry of Finance plans to ensure that the country will reap the benefits of this emerging technology - safely and securely.

200 individuals arrested in Phnom Penh for online crypto fraud

Cambodian police have arrested 200 Chinese agents during a building complex raid, hailing from the Chinese province of Yunnan. The raid was conducted by a joint task force of Cambodian police officers and Chinese officials.

Phnom Penh crypto online fraud cryptocurrency crypto
The Cambodian police arrested 200 individuals.

A total of 40 rooms in three different buildings were deduced to be the places for their criminal activities. The building complex contained a minimart and restaurant, and seemed normal despite its thick barbed wires. More inspections are underway and the owner is still at large, according to the Khmer Times.

Cambodia launches "Bakong" as its own digital currency

Cambodia recently announced "Project Bakong," a government-backed digital currency. The project aims to explore the use of an alternative technology platform to enhance the payment system in Cambodia, and further gauge the use of the Cambodian Riel. The idea for Bakong was conceived as early as 2017, when alternative technologies in the payment system were being tested.

Hyperledger Iroha blockchain framework Japan NBC Bakong Core
The Bakong Project integrates the open source Hyperledger Iroha blockchain framework.

The system feature boasts Hyperledger Iroha, a permissioned blockchain network - as a core system. Bakong enables plug-and-play mode for participating in the new payment platform. Transactions are validated using a Byzantine Fault Tolerant (“BFT”) consensus algorithm that ensures consistency across the distributed ledger. Bakong also allows for P2P trading where end users can perform real-time retail fund transfers via its one-stop-shop for mobile payment and banking. The app enables users to to transfer funds efficiently by dialing phone numbers, scanning QR codes, or just selecting from their contact list and easily depositing funds into accounts within Bakong's network.

The Intel

Cambodia's government has outlawed the use of cryptocurrencies without proper licensing. The authorities are quick on their feet to apprehend violators, and 200 Chinese agents have already been arrested in the country. Despite their seemingly ongoing war against crypto, Cambodia has launched its own digital currency "Bakong." This project aims to easily transfer funds in the network system, while promoting P2p trading. Despite the prohibition of cryptocurrency-related activities in Cambodia without a license - the country views the potential for its economy.

DISCLOSURE:

‌‌‌‌This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. Charts, graphs and references to any digital assets are for informational and illustrative purposes only.

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