Cambodia's financial regulators are moving to create formal rules for virtual assets, including cryptocurrencies, citing growing risks to the economy and consumers.

In a joint notice issued on September 23, the Securities and Exchange Regulator of Cambodia (SERC) and the National Bank of Cambodia (NBC) said the rapid expansion of the virtual asset market could create macroeconomic challenges as well as concerns around consumer protection and money laundering.

Regulators Cite Growing Risks and Global Growth

The notice, titled "Regulation of Virtual Assets and Virtual Asset Service Providers," said regulators have been closely tracking the fast development of the sector and its increasing use both as a speculative investment and as a method to pay for goods and services.

Virtual assets were defined as digital representations of value that rely largely on cryptography and distributed ledger or similar technology, which can be traded or transferred electronically and used for payments or investment.

The two authorities pointed to risks linked to the use of such assets, including tax evasion and cybercrime. They noted that these risks have grown due to wider global adoption, the cross-border nature of virtual assets, and their closer connections to the traditional financial system.

An earlier joint statement in 2018 from the SERC, the NBC and the General Commissariat of National Police had already warned that individuals or companies dealing in cryptocurrencies without a license from the relevant authorities would face penalties under applicable laws.

According to the latest notice, these evolving conditions make a comprehensive, consistent and coordinated regulatory approach necessary.

New Licensing Requirements and Core Principles

The regulators said that proper oversight could also bring benefits, such as greater transparency in financial markets, wider access to financial services, stronger economic empowerment and additional public revenue.

The proposed framework will be built around three main principles: protecting investors and consumers, ensuring market integrity, and supporting innovation.

Under the plan, licensed commercial banks that want to offer virtual asset-related services to customers will need to secure prior approval from the National Bank of Cambodia. Other legal entities licensed by the NBC that wish to provide such services must obtain a license from the SERC in advance.

The SERC and NBC said they will work together to coordinate the future development of the virtual asset market as it continues to evolve, including through regular reviews of their cooperation.

The authorities also reminded the public that virtual assets are not considered legal tender in Cambodia and are not backed or guaranteed by the government or the central bank.

"Virtual assets are highly volatile and involve substantial risks. The public is advised to carefully assess the risks associated with any transactions involving virtual assets and to make well-informed investment decisions," the regulators said.