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Cryptocurrency Crackdown: Cambodia Blocks 16 Exchanges, Usage Surge

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  • Cambodia has blocked 16 major cryptocurrency exchanges, including Binance and Coinbase, to regulate the market.
  • Retail crypto usage remains high, with centralized exchanges handling 70% of transactions.
  • Fraudulent activities, including scams linked to $49 billion in transactions, persist as key concerns.

Cambodia has intensified its efforts to regulate the cryptocurrency sector by blocking 16 major crypto exchange websites, including Coinbase and Binance. This move, part of a broader campaign, comes from the Telecommunication Regulator of Cambodia (TRC), which ordered the block of 102 domains under chairman Srun Kimsann. The crackdown aims to curb unlicensed activities and tighten oversight.

Despite these measures, Cambodia ranks among the top 20 countries for retail crypto usage globally. Reports reveal that centralized exchanges account for 70% of all crypto transactions in the country. However, fraud and criminal misuse of digital currencies remain significant concerns.

Out of numerous exchanges, only two firms have acquired operating licenses under the Securities and Exchange Regulator of Cambodia’s (SERC) “FinTech Regulatory Sandbox” program, launched in 2022. The gap between SERC’s progressive stance and the National Bank of Cambodia’s (NBC) conservative approach to digital assets further complicates the regulatory environment.

Binance, one of the affected platforms, has partnered with SERC to help shape a regulatory framework. A spokesperson stated, “We are closely monitoring the evolving situation.” Despite the crackdown, its mobile apps remain functional, hinting at the limitations of the restrictions.

Cryptocurrency Fraudulent Activities Cast a Shadow

Cryptocurrency-related fraud has drawn intense scrutiny in Cambodia. A prominent case involved the Huione Pay platform, which allegedly processed over $49 billion in transactions linked to scams across Southeast Asia. Criminal groups reportedly use digital currencies for dark-web payments, exacerbating the problem.

The UN Office of Drugs and Crime (UNODC) has highlighted these concerns, urging more robust measures. Yet, Cambodia’s enthusiasm for crypto among retail users shows no signs of waning, signaling a disconnect between regulatory ambitions and market realities.

Binance CEO Met President Of Côte d’Ivoire For Crypto Inclusion

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Binance CEO Changpeng Zhao a.k.a CZ was in Côte d’Ivoire recently to discuss the prospect of including crypto activities on commercial exchanges in the West African nation.

After enduring regulatory pressure from the South African region last year and halting its futures trading service, Binance’s next destination was to expand in the West African crypto market.

On 6th July, CZ retweeted a Twitter post that showed him meeting with the nation’s president Alassane Dramane Ouattara.

According to the govt website, the interview with the Binance founder at the Palace of the Presidency of the Republic, focused on economic and financial issues related to access to cryptocurrency.

Besides being the largest economy in the West African Economic and Monetary Union, Côte d’Ivoire has announced a slew of initiatives to draw business from around the world.

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Binance CEO Met President Of Côte d'Ivoire For Crypto Inclusion 2

At the recently concluded Africa CEO Forum, an event that saw the participation of nearly 2,000 political, business, and thought leaders, topics were mainly focused on emerging technologies that included digital payments, Blockchain, etc.

Since September last year, crypto adoption in Africa jumped by over 1,200%. Several crypto-focused firms and entrepreneurs see the potential for massive adoption in the region.

Africa’s crypto scene had a major turnaround when the Central African Republic [CAR] surprised everyone when it decided to quietly adopt Bitcoin as its legal tender after El Salvador.

Moreover, as we reported, CAR has recently launched the crypto hub project Sango on July 3 to bolster digital assets adoption in the country.

Meanwhile, Binance offered to share its expertise with Cambodian Fintech, a few days ago.

Binance Signs MOU With Cambodia’s Regulator

Crypto exchange Binance has signed a memorandum of understanding with the Securities and Exchange Regulator of Cambodia [SERC], according to a June 30 announcement.

As per the blog, Binance and SERC will work together to develop digital assets regulations in the country. SERC is looking to leverage Binance’s technical expertise and experience in the field to develop its own legal framework for the digital asset market.

It needs to be mentioned that cryptocurrencies are not regulated in Cambodia, and as such any unlicensed activity with regards to these asset class digital assets is deemed illegal.

The partnership assumed significance for the South Asian country, where any crypto-linked activity is highly prohibited since 2018.

China’s Digital Yuan Ranks Third in World; Second In Asia In CBDC Race: Report

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China has made significant progress in the development of central bank digital currency [CBDC], becoming the world’s first major economy to pilot a digital currency. Even so, as per a new report, the digital yuan is not the topmost CBDC in the world or in Asia.

According to the latest report by PricewaterhouseCoopers [PwC], China is third when it comes to project maturity, behind the Bahamas with the Sand Dollar and Cambodia, with project Bakong.

The report also mentioned that the digital version of the Bahamian Dollar as well as Cambodia’s DLT-based interbank payment system is either accessible to all the residents via the mobile application, physical payment card, or already is tied up with domestic commercial banks and payment processors. But China is still at the advanced level of trial.

China’s Digital Yuan Might Not Be Able to Tip Dollar’s Supremacy Just Yet

Despite popular notions about Digital Yuan, there are other CBDCs at the global level that require attention. Many market commentators have previously speculated China’s digital yuan to be a huge threat to the dollar. The digitization of China’s yuan has been a thing of global fascination especially in the backdrop of a flourishing cryptocurrency market. With regards to political implications and as well as the new economic levers that digital yuan might generate for the government domestically as well internationally, were also given adequate food for thought.

However, a senior Bank of Japan official recently downplayed the potential for China’s digital yuan to threaten the dollar’s position as the world’s main reserve currency. Kazushige Kamiyama, who happens to be head of the BOJ’s payment systems department and the individual who is tasked with looking into a virtual Japanese currency stated,

“The dollar’s status as the key global currency won’t change so easily. In fact, the dollar’s advantage may strengthen further if the U.S. goes with digitalization.”

Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics, also noted that despite China’s massively-hyped digital currency advances, the digitized yuan is yet to prove to be cheaper, more efficient, more private, or more convenient than the existing domestic and international payment systems. While addressing the “threat” to the USD, Chorzempa added,

“[It is] unlikely to represent any more a threat to the dollar’s international dominance than the current forms of RMB, at least over the short and medium-term”

Blockchain-Powered Scratchcard Lottery Set to be Launched in Cambodia

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The new system described as the world’s first ‘paper-based blockchain-powered lottery‘ guarantees greater transparency in the embryonic Cambodia gambling sector. Chinese lottery solution provider Hongbo has been granted a license to partner with Cambodian lottery operator Jinxiang to develop a blockchain-powered scratchcard lottery.

The Chinese lottery solutions firm’s initial offer will be a paper scratchcard product known as Goldvalley KHR. Lottery participants will be able to confirm the legitimacy of the lottery scratchcards and the amount payable by scanning the QR code on the card pegged to the blockchain record.

In addition, the printing and distribution of lottery tickets will be monitored through a blockchain-based supply chain dubbed Scratchblock. The production of random digits determines the payoffs of the lotteries. The numbers determine the deployment of symbols that should be matched in order to win a prize on the scratch card product.

Blockchain-powered scratchcard lottery to enhance transparency

In the majority of administrations, the algorithm that decides the administration or randomness of these digits; are strictly supervised by the authority mandated with overseeing gambling in the region. Notably, lottery gambling has only been validated just recently in Cambodia. Additionally, the rush to establish the sector and set up nationwide lotteries has been met by complaints that it runs in a black box.

In addition, the blockchain-powered scratchcard lottery will be monitored using some crucial metrics provided by Scratchblock. The blockchain network will enable data comparisons, such as comparing the prize return rates and the batch numbers of the scratchcards. The metrics help exhibit that the odds are uniformly dispensed out.

Application of blockchain technology in lotteries

The new blockchain-based lottery in Cambodia is not the first time blockchain technology has been applied in the lottery system. Shenzhen’s Welfare (Charity) Lottery system conducted its initial test on the blockchain technology application back in 2019. However, the lottery is electronic and not paper-based.

In conclusion, Cambodia has made use of technology in other areas as well. The Asian nation’s central bank announced that it is creating a central bank digital currency just recently. The central bank aims to improve the liquidity of Cambodia’s legal tender, Riel.