Introduction: As global finance evolves, many countries are exploring bitcoin as an alternative reserve asset. Proponents argue that adding bitcoin to national reserves can hedge against fiat inflation, diversify away from the US dollar, and spur financial innovation. This report examines how a Bitcoin reserve might strengthen Cambodia’s economy by enhancing resilience, supporting de-dollarization, accelerating fintech adoption, and improving geopolitical standing. We also compare approaches in El Salvador, Bhutan, and the Central African Republic (CAR), and outline Cambodia’s current monetary framework (including the Bakong digital currency).
Economic Resilience
Holding Bitcoin could help Cambodia hedge against inflation and currency risk. Unlike fiat money, Bitcoin’s supply is capped by its protocol, making it inherently deflationary. Analysts note that “traditional reserve assets like gold and the US dollar are becoming more politically entangled” , whereas Bitcoin is a non-sovereign store of value. By diversifying some reserves into bitcoin, Cambodia could reduce the impact of US monetary policy and inflation spillovers. In times of stress, Bitcoin “could become a financial safety net” when local currencies weaken . Bitcoin is also borderless and censorship-resistant, so it cannot be frozen or confiscated by foreign powers – a concern underscored by the 2022 freezing of Russian reserves . In short, a Bitcoin buffer may protect purchasing power and provide an alternative liquidity source if traditional markets seize up.
- Inflation hedge: Bitcoin’s fixed supply and growing institutional adoption support its reputation as “digital gold.” Even as Cambodia’s inflation has remained relatively low (~2% in 2023), holding bitcoin could guard against future spikes or a depreciating riel, since bitcoin’s value has historically appreciated against many fiat currencies over the long term. Institutional investors increasingly view Bitcoin as an inflation hedge .
- Crisis resilience: In a global financial crisis or sanctions scenario, Cambodia’s dollar reserves or foreign deposits could be threatened. Bitcoin, by contrast, exists on a decentralized network outside the traditional banking system. If treated as a “neutral, trust-based alternative to politically entangled fiat” , it might provide liquidity when conventional assets are constrained.
De-Dollarization
Cambodia is highly dollarized: foreign currency (mainly USD) dominates the financial system. Estimates show that 90–95% of bank deposits are in USD, and about 80% of transactions are in dollars. The government has long sought to strengthen the riel. For example, in May 2020 the National Bank of Cambodia (NBC) phased out $1, $2 and $5 bills to promote local currency use . Former NBC director Chea Serey warned that dollar-dependence “can make Cambodia lose control of monetary policy,” since the dollar is set by the U.S. Fed, not local authorities .
A Bitcoin reserve would diversify away from USD. By holding bitcoin, Cambodia could reduce its reliance on dollar-denominated reserves and seigniorage. Analysts note that allocating bitcoin can be a “pragmatic diversification” to “reduce dependence on dollar-based reserves” . In effect, bitcoin would join gold and SDRs as non-USD reserve assets. This could complement the NBC’s de-dollarization efforts (like requiring banks to lend more in riel) by substituting some traditional FX holdings with bitcoin.
- Dollarization statistics: Cambodia remains one of Asia’s most dollarized economies. JICA reports that FX deposits once exceeded 90% of total bank deposits. Even as this has fallen slightly due to policy measures, Cambodia still relies on U.S. dollars far more than neighbors.
- Supporting the riel: NBC’s Bakong platform itself is aimed partly at reducing dollar use by making riel transactions easier . A bitcoin reserve would signal commitment to currency diversification. In essence, by holding bitcoin (a global digital asset) instead of more dollars, Cambodia would lessen its vulnerability to U.S. policy swings.
Financial Innovation
Integrating Bitcoin could accelerate fintech development and digital literacy in Cambodia. The country is already on a fast track toward digital finance. Cambodia’s youth-driven population is enthusiastic about crypto: over 66% of Cambodian crypto users are aged 18–24 , and the country ranked 17th globally in crypto adoption in 2024 . The government’s Bakong blockchain payment system has already achieved impressive scale: by mid-2021 it had 200,000 users and $500 million in transactions in six months , and today about 65% of Cambodians use Bakong . This mobile-first, underbanked market (≈33% adults with formal bank accounts) is well-suited for further fintech innovation.
- Digital payments backbone: Cambodia’s success with Bakong shows readiness for blockchain payments. Bakong (a riel-backed CBDC-like system) greatly modernized payments, training millions to “trust a cryptographic ledger” . Expanding that infrastructure to include Bitcoin (e.g. via Lightning Network gateways) would be a natural extension, enabling cheaper remittances and new payment apps.
- Attracting blockchain investment: Officially embracing Bitcoin could attract global crypto firms and venture investment. In Jan 2025 the NBC even created a legal framework allowing banks to service stablecoins and tokenized assets . This regulatory clarity (Group 1 vs Group 2 crypto rules ) means Cambodia is laying groundwork for a crypto ecosystem. A sovereign Bitcoin strategy would likely spur fintech startups (wallets, custody services, Lightning payment providers) and encourage foreign exchanges to enter the market. Industry analysts argue that a government-led reserve would normalize bitcoin and provide a blueprint for private sector adoption .
- Financial inclusion: By increasing competition and digital payments, Bitcoin can aid inclusion. Surveys show a large unbanked and underbanked population in Cambodia; self-custodial crypto wallets run on phones could reach many citizens not served by banks . Bitcoin integration (e.g. micropayments) would require more people to learn digital finance skills, raising overall digital literacy.
Geopolitical Positioning
A Bitcoin reserve could enhance Cambodia’s financial sovereignty. Unlike superpower-controlled currencies, Bitcoin is borderless. As one analysis notes, the dollar’s status has been eroded by “weaponization” via sanctions (e.g. freezing foreign reserves) . Many countries now hedge by accumulating alternative assets (gold, crypto) to avoid being dependent on U.S. policy. For Cambodia—which maintains a neutral foreign policy and seeks regional balance—Bitcoin could serve as a neutral reserve asset immune to any single government’s control. By holding Bitcoin, Cambodia would send a signal of economic independence, making it less beholden to dollar-denominated pressures.
At the same time, any Bitcoin strategy must navigate geopolitics. Early adopters have faced scrutiny: El Salvador’s IMF loans were conditioned on reducing Bitcoin use , showing that legacy institutions may push back. However, taking a measured approach (e.g. through a reserve rather than mandatory legal tender) might avoid major conflicts. Over time, an official Bitcoin reserve could improve Cambodia’s leverage by giving it access to the global crypto economy, perhaps even facilitating easier trade with emerging markets that also favor crypto. In short, Bitcoin offers a way to depoliticize part of Cambodia’s reserves, aligning with its policy of non-alignment and neutrality.
Comparative Analysis
| Country | Bitcoin Policy/Strategy | Motivations (Rationale) | Status/Outcomes |
| El Salvador | Bitcoin legal tender (Sept 2021); government-issued Chivo wallets and ATMs . | Financial inclusion; boost tourism and investment; diversify beyond USD . | High-profile first mover. Achieved rapid adoption during launch, but everyday usage remains low (only ~20% of Chivo users stayed active) . Faced IMF concerns – Salvadoran law was later made conditional on rolling back some Bitcoin measures . |
| Bhutan | Sovereign Bitcoin mining (via renewable hydropower, through Druk Holding) . | Monetize abundant hydroelectric power; build reserves without direct market purchases . | Quiet and strategic. Bhutan leverages cheap energy to mine BTC without triggering major institutional pushback. This generates a “digital reserve” with minimal market impact . Public details are limited. |
| Central African Republic | Adopted Bitcoin (April 2022) then quickly reversed after court ruling; pivoting to a “Sango” crypto-token strategy . | Political independence: reduce reliance on French-backed CFA franc; attract foreign investment and diaspora funds . | Implementation stalled. The Constitutional Court struck down BTC legal tender in 2022 . The government then created a partially Bitcoin-backed crypto (Sango Coin), but progress has been slow. Ongoing challenges include extremely low internet access and institutional capacity . |
| Cambodia (Prospective) | No official Bitcoin adoption yet; proposals suggest accumulating BTC as a sovereign reserve asset. | Hedge inflation/currency risk; accelerate fintech; diversify away from USD; enhance global standing. | Potential: Cambodia’s young population and existing blockchain infrastructure (Bakong) provide fertile ground. Observers note Cambodia’s “mobile-native youth” and “proven blockchain payment culture” could make it a future Bitcoin leader . Careful implementation (capping holdings, regulatory oversight) would be needed to manage volatility. |
Table: Summary of Bitcoin-related strategies in select countries (policies, motivations, outcomes). Sources: National authorities and financial analyses .
Economic Indicators (2023)
Below is a comparison of key economic metrics to contextualize Cambodia versus these peers:
| Indicator | Cambodia | El Salvador | Bhutan | C. African Republic |
| Population (2024) | 16.7M | 5.72M | 0.80M | 5.83M |
| GDP (USD, 2023) | ~$30.0B | $36.75B | $3.42B | $3.20B (est.) |
| Inflation (CPI, 2023) | ~2% | 1.8% | 5.6% (2022) | 3.2% (2022) |
| Remittances (% of GDP, 2023) | 6.6% | 22.6% | 2.7% | — |
| Official FX Reserves (2023, USD) | ~$20.0B (12% ⬆ in 2023) | $3.3B (≈IMF) | ~$0.45B | ~$0.35B |
| Deposit Dollarization (USD share) | ~90% | 100% (USD used) | ~0% (INR peg) | 100% (CFA franc) |
Sources: IMF and World Bank data; central bank reports. (E.g. CBS and CEIC for remittances , IMF WEO for GDP/inflation , NBC announcements). These figures illustrate each country’s scale, inflation rate, and reliance on foreign currency.
Cambodia’s Monetary System
Cambodia’s current monetary framework is a dual-currency system: the Cambodian riel (KHR) is legal tender alongside the US dollar. In practice, dollars dominate. After UNTAC in 1992, USD flooded the economy and became the de facto medium of exchange . By 2018, about 83% of banking deposits were in dollars , making monetary policy challenging. NBC governors have stressed that heavy dollarization “can make Cambodia lose control” of policy, since local interest rates only affect the riel side .
To regain autonomy, NBC has taken measures to strengthen the riel. In May 2020 it phased out small USD bills ($1–5) to encourage use of the riel . It launched a Liquidity Providing Collateralised Operation (LPCO) in riel, lending 3.4 trillion KHR (~$838M) to banks in 2016 . In late 2020, NBC introduced Bakong, a blockchain-based, P2P payment network (often described as a type of CBDC or tokenized deposit). Bakong links digital wallets to bank accounts, enabling real-time riel payments. It scaled rapidly: by mid-2021 there were 200,000 Bakong users and ~$500M in transactions , and by 2024 over 65% of Cambodians (including the unbanked) were using it . Bakong has even been integrated regionally (QR payments with Thailand, Laos).
In early 2025, Cambodia clarified its crypto regulatory stance. NBC published its first digital asset rules, categorizing stablecoins/tokenized securities as “Group 1” (limited usage) and unbacked cryptocurrencies (like Bitcoin) as “Group 2” . Banks can provide services only after NBC approval, and their exposure to Group 1 assets is capped (5% of capital) . Unbacked crypto holdings (e.g. Bitcoin) are heavily restricted. These regulations show Cambodia’s cautious but pragmatic approach: it nurtures blockchain innovation (via Bakong and sandboxes) while tightly overseeing riskier assets .
Strategic Vision and Conclusion
Looking forward, a Bitcoin strategic reserve could position Cambodia as a pioneer in digital finance. Cambodia’s strengths—high mobile penetration, youth demographics, and a government already embracing blockchain (see Bakong and fintech policies) —create fertile ground. Observers note that Cambodia’s “proven blockchain payment culture” and hunger to “leapfrog traditional finance” could make it one of Southeast Asia’s next crypto success stories . A formal Bitcoin reserve would further signal that Cambodia is open for innovation.
Practically, this means Cambodia could attract international blockchain businesses and developers looking to partner with an early-adopter government. Reduced remittance fees via Lightning Network payments and Bitcoin-based tourist spending (Cambodia had ~5.4M foreign visitors in 2023) could add economic upside . It would also complement the Digital Economy & Society Policy (2021–2035), which explicitly encourages blockchain and cross-border fintech. Finally, in a multipolar world where the dollar’s neutrality is questioned , Cambodia can claim a leadership role by adopting “neutral trust-based” money.
In summary, a cautious accumulation of Bitcoin—framed as a strategic reserve asset—could bolster Cambodia’s economic resilience and modernize its financial landscape. By combining this with existing initiatives (digital literacy programs, Bakong expansion, regulatory sandboxes), Cambodia could become a testbed for 21st-century monetary policy. It would send a clear message: that the Kingdom is not only protecting its economy from inflation and dollar-dependence, but also actively shaping the future of money in Asia.