2024 Sees Vietnam Implementing Crypto Regulations
Welcome, dear readers, to the next installment of my writing series, ‘The Cryptocurrency Breakthrough 2020 – Synopsis 21.’ In this chapter, we will delve into the topic of cryptocurrency regulations in Vietnam.
Cryptocurrency made its way to Vietnam in 2009, introducing alternatives like Bitcoin, Ethereum, Litecoin, and Ripple as a means of digital currency. People sought different avenues to transfer and receive money from overseas bank accounts without the hassles and heavy fees associated with traditional methods. Cryptocurrencies provided a better option for them.
The Vietnamese government has recognized the potential of cryptocurrencies and the blockchain technology behind them. As one of the fastest-growing economies in the world, Vietnam has shown a clear vision of supporting digital technologies in the country, providing the necessary requirements for local blockchain and crypto companies.
In fact, in 2019, nearly half of the startups in Vietnam were from the blockchain and crypto sector, and this number is expected to grow even more in 2020. The government is also exploring the possible applications of blockchain technology in various sectors.
Vietnam has also taken steps towards becoming a cashless society. The deputy Prime Minister, Vuong Dinh Hue, signed a policy decision in 2017 to reduce cash transactions in the country to less than 10%. The State Bank of Vietnam has collaborated with South Korean payment service provider Alliex to develop a $700 million cashless payment network.
One notable partnership is between Tien Phong Commercial Joint Stock Bank (TPBank) and Japan’s SBI Ripple Asia. They have joined forces to develop a blockchain-based global payment network called Ripplenet for processing cross-border transactions between Japan and Vietnam.
In 2017, the Vietnamese government launched its smart city project, aiming to develop Ho Chi Minh and Hanoi cities into Smart Cities by 2020 and 2030, respectively. These cities will be built with advanced technologies like blockchain, 5G, and facial recognition.
While cryptocurrencies are not considered legal tender in Vietnam, they are allowed for buying, holding, and trading. The government is still evaluating its approach towards the crypto space, but the country’s central bank has made it clear that cryptocurrencies are not legal tenders.
The government of Vietnam has cited several reasons for the need to regulate cryptocurrencies. These include the lack of government supervision, which makes the crypto industry prone to illegal activities. Cryptocurrencies also lack customer protection due to their volatility, leading to price instability, security concerns, and market manipulation. They are also susceptible to illegal activities such as tax evasion, money laundering, terrorist funding, and hacking. Furthermore, the destabilization of existing financial systems by cryptocurrencies can impact the nation’s economy.
Vietnam has made several efforts to regulate its cryptocurrency space. In 2017, the Prime Minister approved a project to complete the legal framework for managing digital assets and their activities. In 2018, a directive was issued to manage crypto transactions and ban the use of cryptocurrencies as a mode of payment for goods and services. However, investing in cryptocurrencies was still allowed. The Ministry of Justice also proposed three different policies for the government to consider.
Recently, in May 2020, the Vietnamese Finance Ministry approved the establishment of a research group to review and develop regulatory policies for crypto-assets. The research group is composed of members from various departments, including the General Department of Taxation, National Institute of Finance, General Department of Vietnam Customs, and the Department of Banking and Financial Institutions of the State Bank of Vietnam.
As for taxation and mining, since cryptocurrencies are not considered legal tender, tax policies surrounding them have not been established yet. The mining of cryptocurrencies is also restricted, as the import of bitcoin mining equipment was initially banned. However, the Ministry of Industry and Trade proposed allowing the importation of mining equipment, which was accepted by the government.
In conclusion, the Vietnamese government has taken a progressive approach towards regulating cryptocurrencies, but further laws and reforms are needed to ensure the secure flow of cryptocurrency transactions and protect investors’ funds. The future of cryptocurrencies in Vietnam looks promising with the implementation of proper regulatory frameworks.