Cambodia has intensified its crackdown on unlicensed cryptocurrency activities by blocking major platforms like Binance.
The Telecommunication Regulator of Cambodia (TRC) recently issued a directive to block 102 websites, including 16 crypto exchange platforms like Binance and Coinbase. The move was prompted by their lack of licensing from the Securities and Exchange Regulator of Cambodia (SERC). While the websites are now inaccessible within Cambodia, their mobile applications remain operational.
According to local reports, the crackdown mainly targeted platforms linked to online gambling, yet the inclusion of globally recognized crypto exchanges surprised many in the industry.
Cambodia has taken a cautious stance on cryptocurrency, with only two entities currently authorized to operate under the SERC’s FinTech Regulatory Sandbox program. Even these licensed platforms face several restrictions. For instance, they cannot facilitate the exchange of digital assets for fiat currencies, including the Cambodian riel and US dollars.
Rising Crypto Scams in Cambodia
Cambodia’s crypto regulatory measures come amid growing international scrutiny over its role as a hub for cybercrime and crypto scams. The UN Office on Drugs & Crime has flagged the country as a hotspot for illicit activities, including money laundering and dark web transactions facilitated through cryptocurrencies. Criminal syndicates, often tied to Chinese gambling and fraud networks, have trafficked around 30,000 individuals to Cambodia and neighboring Myanmar.
These victims are coerced into creating fake online profiles and orchestrating online scams, including elaborate fraudulent cryptocurrency schemes. They often operate under severe duress, enduring both physical and psychological abuse. Many of these illicit activities are traced back to Sihanoukville, a city infamous for its connection to illegal online gambling operations. Notably, Cambodia banned such gambling activities in 2020 following intense pressure from Beijing.
A Chainalysis report further underscored the issue, revealing over $49 billion in crypto transactions linked to Huione Guarantee, a major player within the Cambodian conglomerate Huione Group. Such activities have heightened global pressure on Cambodia to improve its regulatory and enforcement framework.
Market Dynamics Amid Crackdown
The National Bank of Cambodia (NBC) has taken a reserved stance on cryptocurrencies, banning institutional trading and issuing repeated warnings about crypto-related fraud. However, the NBC is exploring the development of a Central Bank Digital Currency (CBDC). This signals interest in using blockchain technology for state-backed financial initiatives.
Despite the government’s recent crackdown on crypto exchanges, Cambodia remains a notable player in the global crypto landscape. It ranks among the top 20 countries for retail crypto usage per capita. As per several reports, 70% of crypto transactions in the country are conducted through centralized exchanges.
While Cambodia’s efforts aim to curb illegal activities and restore its reputation, critics argue that these measures often fail to address the decentralized and borderless nature of cryptocurrencies. The country needs to balance between cracking down on cybercrime and fostering a legitimate digital asset ecosystem.
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