Prakas on Transactions Related to Cryptoassets

Introduction

On 26 December 2024, the National Bank of Cambodia (“NBC“) issued Prakas No. B7-024-735 on Transactions Related to Cryptoassets (“Prakas“). The Prakas aims to allow commercial banks, payment service institutions, as well as other legal entities, to carry out activities and/or provide services on cryptoassets and related instruments as cryptoasset service providers (“CASPs“) under a regulated environment.

This Update sets out a high-level summary of the key features introduced by the Prakas.

Keywords

The following keywords are referred to in this Update:

• Cryptoassets: This refers to digital representations of value that depend on cryptography and distributed ledger or similar technology. Cryptoassets include tokenized traditional assets, unbacked cryptoassets, stablecoins, utility token, and securities token. However, this does not include central bank digital currencies (“CBDC“);
• Cryptoasset service providers (CASPs): These refer to any entity that offers services or engages in activities related to cryptoassets on behalf of customers, namely (a) exchange against official currencies or other cryptoassets; (b) transfer services; and/or (c) custody and administration;
• Tokenization: This refers to a technological and legal process of attaching enforceable rights to entries in a distributed ledger technology (“DLT“)-based system; and
• Stablecoin: This refers to cryptoassets that aim to maintain a stable value relative to a specified asset or a pool or basket of assets.

Key Features of the Prakas

Classification of cryptoassets

The Prakas classifies cryptoassets into two groups: Group 1 and Group 2.

Group 1: consists of cryptoassets that are the digital representation of traditional financial instruments or the value of which refers to traditional assets or to a pool of traditional assets known as reference assets. Group 1 is further divided into two groups as follows:

1. Group 1a are digital representations of traditional assets that have gone through tokenization, in particular tokenized securities, using DLT or a similar technology to record ownership. The traditional assets include corporate bonds, loans, deposits or equities, derivatives, commodities, and cash in custody.
2. Group 1b are stablecoins with an effective stabilization mechanism to traditional assets or a pool of traditional assets that aim to maintain a stable value of the reserve assets, excluding any reference to cryptoassets or any kind or algorithm-based stablecoins.

Group 2: includes all cryptoassets that do not meet the criteria of Group 1, in particular, but not limited to, unbacked cryptoassets that are neither tokenized traditional assets nor stable coins.

Conditions on Conducting Transaction

Commercial banks intending to carry out cryptoasset activities or services must first obtain prior approval from NBC. Under this Prakas, the approval requirement applies solely to activities conducted on their own account. Requirements for activities involving their customers are specified in a separate Prakas.

Commercial banks shall not issue cryptoassets or carry out any services or activities directly or indirectly related to Group 2 cryptoassets.

Prudential Treatment of Cryptoasset Exposures for Commercial Banks

Commercial banks shall implement existing prudential treatment on exposures to Group 1 cryptoassets based on the general principle “same activities, same risks, same regulations” of traditional assets for both banking or trading books.

Cryptoassets exposures are to be reported in accordance with reporting requirements under each applicable regulation. In addition, commercial banks shall report quarterly on the nature and value of the cryptoassets transacted for their own account or on behalf of clients and on the volume of cryptoassets exposures.

Cryptoassets Services

Any commercial banks, payment services institutions, or CASPs wishing to offer or be involved in the conduct of one or more of the following activities are required to obtain a prior authorization from NBC:

1. exchange of cryptoassets;
2. transfer of cryptoassets; and
3. safekeeping or administration of cryptoassets or of instruments enabling control over cryptoassets.

The requirements, conditions and criteria for the prior authorization mentioned above will be later determined by NBC.

Sanctions

Commercial banks, payment services institutions and licensed CASPs will be penalized in accordance with Article 52 of the Law on Banking and Financial Institutions for failure to comply with this Prakas.  Additionally, NBC may impose the following fines:

1. KHR500,000,000 per transaction on commercial banks who fail to comply with the prohibitions on issuing cryptoassets and Group 2 cryptoasset activities;
2. KHR20,000,000 – KHR500,000,000 on commercial banks who breach the exposure threshold for cryptoassets in Group 1a and Group 1b stipulated in this Prakas;
3. KHR1,000,000 per day on commercial banks who fail to comply with the reporting obligation set forth in this Prakas; and

KHR3,000,000 per day for non-compliances not covered in points 1, 2, and 3 above, starting from  the deadline NBC requires the institution to take the relevant corrective action.