The National Bank of Cambodia (NBC), the country’s central banking authority, warned yesterday against the use of cryptocurrencies, arguing that the use of virtual money entails considerable risks for users in the kingdom as they are not backed up my any financial authority and their value is not tied to the economic situation.
Cryptocurrencies, the most famous of which is the Bitcoin, have come into vogue only in the last few years, offering users a handy and untraceable alternative to traditional, “physical” currencies to purchase anything from groceries to stocks. The creation of new units and the verification of asset transfers is done through cryptography.
Speaking during the Fourth Annual NBC Macroeconomic Conference held in Phnom Penh yesterday, NBC’s director general Chea Serey said a handful of companies are now operating in Cambodia trying to persuade people to use cryptocurrencies for everyday purchases and other financial transactions, adding that their activities are not legal as digital currencies are not issued or backed up by any government.
“We want to warn people that all digital coins exchanged in the Cambodian market are not backed up by us. We don’t recognize or accept them.
Ms Serey stressed that digital currencies are not illegal in the Kingdom, but asked users to be wary of them and extremely careful when using them.
“As a financial instrument they are high-risk. We, as the financial authority, have not yet understood all the risks, so we all must be careful when accepting digital coins instead of physical currency,” Ms Serey said.
She said the value of virtual currencies is not based on solid macroeconomic fundamentals, and, therefore, couldn’t be trusted.
“We have already asked banks in Cambodia not to allow people to conduct transactions with cryptocurrencies,” she said, adding that if people still choose to use digital currencies they will most likely lose their investment.
The NBC is now studying ways to regulate the nascent cryptocurrency market to minimize those risks.
“We don’t know what the future of digital coins will be, so we are looking at neighboring countries for guidance. We should not be moving faster than them. We will continue to study the risks,” Ms Serey added.