The Legislative Landscape of Cryptocurrencies in Cambodia Prior to 2024

As of 2023, the legislative landscape for cryptocurrencies in Cambodia was characterized by a lack of official recognition and legal status, along with warnings from authorities regarding the risks associated with unregulated digital currencies.

Regulatory Overview and Legal Status

The National Bank of Cambodia (NBC), along with the Securities and Exchange Commission of Cambodia and the General-Commissariat of National Police, issued a joint statement in 2018 declaring that activities involving the propagation, circulation, buying, selling, trading, and settlement of cryptocurrencies without obtaining a license were illegal. This statement underscored the country’s stance on unlicensed cryptocurrency activities, highlighting the government’s concerns about the potential risks they posed to the public and the economy​​.

Despite the absence of specific cryptocurrency legislation, Cambodian authorities have actively discouraged the use of cryptocurrencies. The government warned of potential legal penalties for cryptocurrency-related activities, which could include imprisonment or substantial fines. Law enforcement agencies were also authorized to monitor and investigate any suspected illegal activities related to cryptocurrency​​.

As of 2023, there were no clear-cut regulations specifically addressing cryptocurrency in Cambodia. However, the government expressed an intention to draft legislation that would regulate cryptocurrencies and ensure they did not pose a risk to the economy or the public. This indicated a possible future shift towards a more regulated cryptocurrency environment in Cambodia​​.

Cryptocurrency Trading and Gambling

The trading of cryptocurrencies without a license was deemed illegal according to the Cambodian authorities’ joint statement. Despite this legal position, some individuals and businesses in Cambodia continued to engage in cryptocurrency trading, often using online platforms. This ongoing activity suggested a gap between the legal framework and actual practice in the realm of cryptocurrency trading within the country​​.

The Cambodian government also made it clear that any form of gambling using cryptocurrencies was illegal. This included online gambling, which is widespread in many parts of the world. Those found participating in cryptocurrency gambling could face legal consequences under Cambodian law​​.

Development of a Digital Currency

In a move towards embracing digital currency technology, the National Bank of Cambodia had been developing a digital currency called Bakong since 2016. Bakong was designed as a payment and money transfer service, aiming to provide a secure, efficient, and widely accepted digital payment system. This initiative indicated the country’s interest in exploring the use of blockchain technology for enhancing payment systems, despite the overall caution towards cryptocurrencies​​.

Conclusion

In summary, prior to 2024, Cambodia’s approach to cryptocurrency was cautious and largely unregulated, with significant warnings from the government and central bank about the risks associated with these digital assets. The lack of specific laws and regulations created a landscape of uncertainty for cryptocurrency users and investors. However, the development of the Bakong digital currency suggested an emerging interest in the potential benefits of blockchain technology for the national payment system. As the global landscape of digital currencies continued to evolve, it remained to be seen how Cambodia would navigate and potentially regulate this complex and rapidly changing sector.