“Digital Cambodia 2019” is the largest and most influential digital technology event held in Cambodia. The conference, which is taking place in Phnom Penh, from March 15 to March 17, adheres to the principle of building a solid digital foundation for Cambodia’s rapidly growing economy. The National Institute of Posts, Telecommunications and Information Communication Technology (NIPTICT) is hosting and leading this conference together with other departments and bodies from both the public and private sector. Sponsorship support is being provided by Smart City Consortium, Union Pay, Oracle, Cellcard, Huawei Technology (Cambodia), among others.
The emergence of this new era of digital economy brought undivided attention to Fintech in every country. Innovation and regulation have been seen as enemies for decades, is strict compliance standard stopping innovation? But if regulation is always slower than innovation, what is there to protect companies and investors against risk?
Regulators will have to use their wisdom and experience to find the fine balance between innovation and regulation.
At the conference, Jones Chan, the co-founder of the Cambodia Digital Assets Exchange (CAMDAX), and Sou Socheat, director-general of the Securities and Exchange Commission of Cambodia (SECC), have shared their views on the relationship between innovation and regulation in the Fintech Policy Forum as representatives of the digital currency sector in Cambodia.
Sou Socheat said that although Fintech is innovating within new applications and the potential for doing things in a new way in banking, insurance, payment and other financial services, all these projects still fall into the financial category, therefore, it requires the same level of regulation and compliance.
When talking about the regulation on digital asset exchanges, he mentioned that enterprises usually obtained funds through financial intermediaries in the past. The continuous development of technology now allows decentralised transaction with the use of digital assets. Many enterprises tried to apply a license through SECC so they will certainly pay close attention to the development and regulatory approval in this area.
Sou Socheat revealed that there is no licensed cryptocurrency exchange in Cambodia yet, but there are institutions that are currently in the process of applying for licenses. All applicants have to strictly comply with all Cambodian securities laws, including KYC and AML, in order to obtain a license.
During the forum, Sou socheat was asked by an attendee what Cambodian official stance on Bitcoin. He replied, it has already been a few years since The Cambodian central bank (NBC) has first declared that any transactions related to of bitcoin, is considered illegal. In a joint statement signed on June 19, 2018, the National Bank of Cambodia (NBC), the Securities and Exchange Commission of Cambodia and the General-Commissariat of National Police said that domestic investors are now required to obtain a license in order to buy, sell or trade any cryptocurrencies – unlicensed trading activities would be regarded as illegal. At that time, people didn’t know much about bitcoin. Now more people see bitcoin as a payment tool and a form of digital asset.
Jones Chan, the Chairman of Smart City Association and the Co-founder of Cambodia digital asset exchange (CAMDAX), also agreed on Sou Socheat’s views. he said that compliance is the foundation of any financial business. To ensure the health of the financial industry of the country, enterprises and regulator must go through licensing, compliance management, and services standardization. Taking STO as an example, with proper compliance system in place, STO is not fundamentally different from IPO.
However, he believed that Cambodia should run faster when it comes to digital currencies. The urgency to embrace digital assets has never become clearer since it has already sparked a global hype in Japan, the United States and other developed countries. All these countries have already realized the potential of this new technology and recognized digital assets as regulated financial products. Japan is the proven example of how the development of digital assets can bring convenience to their citizens.
Japan’s parliament passed an amendment to the “fund settlement law” in 2017, officially recognized virtual currency as a legal means of payment and incorporating it into the legal regulatory system. It has become the first country to provide legal protection for virtual currency exchanges. BCCC, the first Blockchain industry organization, has also been established with the support of Japanese government. United States is another showcase of embracing digital assets with an open attitude. SEC in the United States will define whether an ICO is a type of securities or barter of goods (utility) first and then consider regulatory models of the CSRC according to the actual situation and specific environment. These developed countries show that by encouraging innovation, it can push forward the development of the whole Fintech industry. However, because of the complexity of a fully developed system, these counties can only continue to move in a slower pace compare to smaller countries. So it is only by seizing this opportunity of embracing Digital Assets, that Cambodia can catch up with the world and overtake in the digital economy.
Jones Chan revealed that CAMDAX has been deeply involved in the development of virtual currency legislation in Cambodia. They had visited the Japanese financial services agency with the Cambodian securities and finance commission and the ministry of finance last year.
After the forum, Sou Socheat, Director general of the SECC, visited CAMDAX’s booth.
Jones Chan, Co-founder of CAMDAX (left)
Sou Socheat, Director general of the Cambodian securities regulatory commission (right)
It is reported that CAMDAX is waiting for the Cambodian government to enact relevant laws and ready to apply to become the first digital asset exchange in Cambodia.
Jones Chan, Co-founder of CAMDAX accompanied the Cambodian securities and finance ministry in the delegation to Japan