The central bank has threatened legal action after a Japanese tech firm announced the development of a Cambodia-based cryptocurrency with the claim that the National Bank of Cambodia (NBC) was backing the new digital tender.
The NBC, which has previously warned of fraud related to the peddling of cryptocurrencies, said in a statement that it had never allowed the purchase, sale or circulation of any form of cryptocurrency in the country.
“We condemn to the highest exten[t] any person who used [the] NBC’s name to disseminate such false information, and we are taking legal actions against this,” the bank’s statement said.
The warning came on Friday as Japan-based Chaintope and Hong Kong-linked Digital Agriculture Exchange held a “cooperation signing ceremony” the day after a Khmer-language press release from Chaintope was disseminated to local reporters.
An English version of the press release, dated December 19, announces the development of K-coin “together with Cambodian corporations and the Cambodian Central Bank”. It names Digital Agriculture Exchange as the local partner.
The press statement says that K-coin is being developed for use in the import, export and processing of farm produce in Cambodia, with an ambitious initial goal of being adopted by 200,000 companies and later expanding to have a total issuable value of $200 billion.
The NBC’s involvement in the digital currency would purportedly have been foundational: “Digital Agriculture Exchange will be able to conduct the issuing and management of K-coin with authorization from a central bank, and with the central bank providing a constant guarantee of trust,” the release says.
It claims that the NBC’s backing would allow K-coin to overcome the fundamental flaws inherent in incumbent cryptocurrencies, such as bitcoin, which have exploded in value in recent years but have become all but useless for actually performing transactions.
Asked by reporters at Friday’s ceremony how the company could claim collaboration with the NBC, Hideki Shoda, Chaintope’s CEO, suggested that reporters should raise the issue with its partner as Digital Agriculture Exchange was in charge of working with the NBC.
Responding to reporters on the same issue, Bridget Lau, Digital Agriculture Exchange’s director, would not directly say whether she had received official recognition from the central bank, only stating that she had met with NBC officials three times to discuss the situation.
Yesterday, a woman who answered a Digital Agriculture Exchange phone number listed with the Commerce Ministry hesitantly gave her name as Ly Leng, but said she did not know how to spell it. She identified herself as the company’s director of administration.
Leng said Chaintope’s announcement was negatively affecting her company’s reputation and the management team was considering taking legal action against its partner.
Leng acknowledged that her company had signed an agreement with Chaintope on Friday, but said it was only related to an agricultural development project and the construction of a golf club in Phnom Penh, and had nothing to do with K-coin.
She said her company had a plan to study the market for cryptocurrencies in Cambodia and had only met with NBC officials to seek information.
“It is just a plan to study the market, but it does not mean we have done the research,” Leng said. “We did not receive any approval from NBC.”
Chaintope’s office phone went unanswered yesterday, while emailed queries to several addresses at the firm, including CEO Shoda’s, received no response.
However, during the afternoon, the company’s press release on K-coin was removed from its website.
Among Chaintope’s previously reported projects have been plans for the adoption of a cryptocurrency in a tiny southwestern Japanese town.
Digital Agriculture Exchange, meanwhile, has had extensive dealings with the Agriculture Ministry. Even as the NBC was chastising the K-coin scheme, the Agriculture Ministry over the weekend publicised a visit by Minister Veng Sakhon to the company’s $10 million Phnom Penh facility involved in food processing and exports.
Digital Agriculture Exchange’s CEO is Hong Kong-based Long Yunhai, who also heads Weihai Dragon Union Agriculture, with which the Agriculture Ministry last week announced an imminent $50 million deal involving mango processing for export to China and Japan.
Chea Serey, the NBC’s director general, last month warned at an economic conference that cryptocurrencies remained “very risky”.
“You should all be cautious if you are lobbied to accept the coins as a form of payment instead of regulated cash currency. This is a new form of fraud,” she said at the time.
Nevertheless, the NBC has explored using blockchains – the mechanism that prevents cryptocurrency users from being able to forge transactions – internally to facilitate and monitor interbank lending.
There has been a proliferation of cryptocurrency-based enterprises worldwide in recent years, and “initial coin offerings” have attracted billions of dollars in investment even as the underlying technology – particularly in the case of bitcoin – has come under criticism for its massive environmental footprint and lack of immediate practicality except as speculative investment.