Cambodia -- Custody Regulations Regulatory Overview

Cambodia currently has a highly restrictive stance on cryptocurrencies and digital assets, which significantly impacts any potential for regulated custody services. Rather than specific custody regulations, the prevailing legal framework (or lack thereof) generally treats unauthorized virtual currency activities as illegal.

Here's a breakdown of the situation regarding cryptocurrency/digital asset custody regulations in Cambodia:

General Regulatory Stance

The core regulatory position in Cambodia dates back to a Joint Press Release issued on May 11, 2018, by the National Bank of Cambodia (NBC), the Securities and Exchange Commission of Cambodia (SECC - now Securities and Exchange Regulator of Cambodia - SERC), and the General Commissariat of National Police.

This statement declared that:

• "The issuance, circulation, and trading of cryptocurrencies and other virtual currencies in Cambodia are illegal activities."
• It warned the public against engaging in such activities, citing risks of fraud, money laundering, and financial instability.
• It explicitly stated that "any person or entity that issues, circulates, or trades cryptocurrencies or other virtual currencies without obtaining a license from the National Bank of Cambodia and other relevant authorities, shall be prosecuted in accordance with the applicable laws of the Kingdom of Cambodia."

This broad prohibition means that there is effectively no legal framework for operating a licensed cryptocurrency business, including custody services, within Cambodia for non-official digital assets.

Specific Custody Requirements:

Given the overarching prohibition, specific regulations for custody services for private cryptocurrencies generally do not exist in Cambodia.

1. Custodial License Requirements:

   • There are no specific custodial licenses for cryptocurrencies/digital assets in Cambodia because the underlying activities (issuance, circulation, trading) are deemed illegal if not authorized by NBC. Since NBC has not authorized private cryptocurrency activities, no licensing mechanism exists for custody.

2. Segregation of Client Assets Rules:

   • Not applicable, as there are no licensed crypto custodians.

3. Insurance/Bonding Requirements:

   • Not applicable, as there are no licensed crypto custodians.

4. Cold Storage Mandates:

   • Not applicable, as there are no licensed crypto custodians.

5. Qualified Custodian Definitions:

   • There is no legal definition of a "qualified custodian" specifically for cryptocurrencies in Cambodia.

Pending Custody Legislation:

As of late 2023/early 2024, there are no publicly announced or reported specific pending legislations focused on regulating cryptocurrency custody services in Cambodia. The authorities have maintained their cautious and restrictive stance.

It's important to distinguish Cambodia's central bank digital currency (CBDC) initiative, "Project Bakong," from private cryptocurrencies. Bakong is an official, NBC-backed payment system designed to facilitate transactions within the national banking system and is not related to the regulation or custody of decentralized cryptocurrencies like Bitcoin or Ethereum. Its existence does not signal a liberalization of the stance on private digital assets.

Regulatory References:

• Joint Press Release on the Illegality of Unauthorized Trading Activities of Cryptocurrencies (National Bank of Cambodia, Securities and Exchange Commission of Cambodia, and General Commissariat of National Police, May 11, 2018):
  • While direct links to older press releases on government websites can sometimes be difficult to find directly, the content is widely reported and confirmed by reputable legal firms and news outlets. An example of a legal firm referencing it:
    • VDB Loi Legal Update (2018) - Cambodia’s Cryptocurrency Ban (This provides a summary and interpretation of the joint statement.)
    • Searching the National Bank of Cambodia's official news releases archives might yield the original document if available, but its existence and content are well-established facts in Cambodian financial regulation.

Conclusion:

In summary, Cambodia's regulatory environment for cryptocurrencies is highly restrictive. The broad prohibition on unauthorized virtual currency activities means that there is no legal framework for licensing or regulating crypto custody services. Entities attempting to offer such services would likely be operating illegally under current Cambodian law.