The National Bank of Cambodia has given commercial banks and payment companies permission to provide services related to cryptocurrencies, but not for bitcoin and other unsupported tokens.

According to Phnom Penh PostNBC officially announced the decision to allow banks to provide services involving Tier 1 crypto assets on December 27. The first category crypto assets are Cryptocurrencies Supported by order, incl stablecoins Such as the US dollar currency (US dollars),USDT(USDT) besides Central bank digital currencies.

Although this also means that Bitcoin (Bitcoin), Ethereum (Ethereum) and other independent cryptocurrencies are still banned in Cambodia.

Under this new law, all commercial banks and payment companies must first obtain approval from the central bank if they want to provide a cryptocurrency-related service. Once licensed, banks and payment institutions can convert cryptocurrencies into fiat currencies and vice versa. They will also be allowed to facilitate cryptocurrency transfers between accounts and provide custody services.

However, financial institutions are strictly prohibited from using a customer's crypto assets for their own benefit.

Prior to NBC's announcement, Cambodia banned its citizens from conducting cryptocurrency transactions or trading cryptocurrencies due to the high volatility posed by virtual assets, as well as the widely held perception that cryptocurrencies facilitate illicit activities such as money laundering and fraud.

This historic move indicates that Cambodia is slowly shifting towards the cryptocurrency industry, following the global trend seen in countries such as Hong Kong, the United States, and the United Arab Emirates. Although compared to those countries, Cambodia is still in its very early stages.

Earlier this month, Cambodia Forbidden 16 major cryptocurrency exchanges including Binance, OKX, and Coinbase. The exchanges failed to obtain licenses from the Securities and Exchange Commission of Cambodia, which is necessary to operate in the country.

Cambodia remains cautious towards cryptocurrencies as a whole, but the country appears to be making moves towards digital currencies tied to fiat currencies. In May, Governor of the National Bank of Cambodia Chea Seri Express Optimism that the digital currency will strengthen the Cambodian rial and reduce dependence on the US dollar.