Cambodia blocks 16 major crypto exchange websites, including Binance and Coinbase, in a move to curb cybercrime. But with mobile apps still active, how effective is the crackdown? - Icoholder

Cambodia's recent decision to block 16 cryptocurrency exchange websites, including major platforms like Binance, Coinbase, and OKX, marks a significant move in the country's efforts to tighten control over its rapidly growing but largely unregulated crypto sector. However, the effectiveness of this crackdown has been called into question, as mobile applications for these exchanges remain fully operational, providing users with an apparent workaround.

A Crackdown on Cybercrime and Crypto-Related Scams

Cambodia’s government has been under increasing pressure to address its reputation as a hub for cybercrime and cryptocurrency-related scams. According to a report by the UN Office on Drugs and Crime (UNODC), criminal groups in Cambodia have been using cryptocurrencies for illicit activities, such as money laundering and conducting transactions on the dark web.

A separate report from blockchain analytics firm Chainalysis revealed that over $49 billion in crypto transactions were linked to Huione Guarantee, a key player within Cambodia's Huione Group, further highlighting concerns over the country's role in illegal crypto activities.

Big Crypto Names in Cambodia’s Crosshairs

On November 20, Cambodia's Telecommunication Regulator (TRC) took the drastic step of blocking 102 websites, most of which were associated with online gambling. However, the decision to block well-known cryptocurrency exchanges like Binance and Coinbase raised eyebrows. The TRC’s official statement explained that these platforms lacked proper licensing from Cambodia's Securities and Exchange Regulator (SERC).

This decision was particularly surprising given Binance’s previous involvement with Cambodian authorities. In 2022, Binance partnered with SERC to help develop regulations for the crypto market and even provided training to Interior Ministry officials to address crypto-related crime. Despite this cooperation, Binance is now on the list of blocked platforms, raising questions about the consistency of the country's regulatory efforts.

Limited Legal Framework for Crypto Operations

While the Cambodian government has taken a hard stance on unlicensed crypto exchanges, only two companies are currently authorized to operate digital asset businesses within Cambodia under the "FinTech Regulatory Sandbox" program. However, even these companies face stringent restrictions, including a ban on converting digital assets into local or foreign currencies. This severely limits their operational scope and effectiveness, highlighting the gap between regulatory efforts and the demands of the crypto market.

Despite these challenges, Cambodia remains a significant player in the global cryptocurrency landscape. The country ranks among the top 20 nations for retail crypto usage per capita, with centralized exchanges processing 70% of all crypto transactions.

Will Stricter Regulations Succeed?

Experts like Chengyi Ong, the head of Asia-Pacific policy at Chainalysis, suggest that broad-based restrictions may struggle to succeed in a market with significant demand and practical applications. Ong’s statement underscores a critical point: even with tightened regulations, Cambodia’s crypto market may continue to grow, adapting to the new constraints.

As the Cambodian government tightens its grip on crypto exchanges, the challenge will be finding a balance between regulating the industry and allowing the sector's growth to continue. Despite the regulatory pressure, the country’s crypto community may find ways to thrive, albeit in the shadows of tighter rules.

In conclusion, while Cambodia's decision to block major crypto exchanges marks a significant step in curbing the unregulated market, the continued operation of mobile apps and the ongoing demand for crypto could mean that the country’s crackdown may have limited success in achieving its long-term goals. As the government navigates these challenges, it remains to be seen how the crypto community will adapt in the face of heightened regulations.