Vietnam to Implement Cryptocurrency Regulations by 2024
Introducing ‘The Cryptocurrency Breakthrough 2020 – Synopsis 21: Cryptocurrency Regulations in Vietnam’
Greetings, fellow crypto enthusiasts! I am Qadir A.K, a devoted lover of all things crypto and a research columnist. Welcome to the latest chapter of my writing series, where we will be exploring the topic of cryptocurrency regulations in Vietnam.
The Rise of Cryptocurrency in Vietnam
In 2009, Vietnam saw the introduction of cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and Ripple. These digital currencies quickly gained popularity as an alternative to traditional cash, especially for individuals seeking a convenient and cost-effective way to transfer and receive money from overseas bank accounts.
Vietnamese Government’s Stance on Cryptocurrencies
Vietnam boasts one of the fastest-growing economies in the world, with a robust GDP. The government has recognized the potential of digital technologies and is committed to providing comprehensive support to local blockchain and crypto companies.
Did you know that in 2019, nearly half of the startups in Vietnam were from the blockchain and crypto sector? This number is expected to increase even further in 2020.
Furthermore, the Vietnamese government is actively exploring the various applications of blockchain technology in the country.
Blockchain for Vietnam’s Cashless Society
In 2017, Deputy Prime Minister Vuong Dinh Hue signed a policy decision aiming to reduce cash transactions in the country to less than 10%. The State Bank of Vietnam also collaborated with South Korean payment service provider Alliex to develop a $700 million cashless payment network.
Another significant development took place when Tien Phong Commercial Joint Stock Bank (TPBank) partnered with Japan’s SBI Ripple Asia to create a global payment network called Ripplenet. This blockchain-based platform facilitates cross-border transactions, marking a major milestone in money transfer services between Japan and Vietnam.
Building Smart Cities with Blockchain
In 2017, the Vietnamese government launched a smart city project with the goal of transforming Ho Chi Minh and Hanoi into smart cities by 2020 and 2030, respectively. These cities will harness the power of technologies such as blockchain, 5G, and facial recognition to enhance efficiency and improve the quality of life for their residents.
Cryptocurrency Laws in Vietnam
While cryptocurrencies are not considered legal tender in Vietnam, individuals are permitted to buy, hold, and trade them. However, the government is still evaluating its approach to the crypto space. The country’s central bank has made it clear that cryptocurrencies are not legal tender.
Reasons for Implementing Regulations
The Vietnamese government has cited several reasons for the need to regulate cryptocurrencies and restrict their use as a means of payment:
1. Lack of government supervision: The crypto industry operates without proper oversight, making it susceptible to illegal activities.
2. Customer protection concerns: Cryptocurrencies are volatile, leading to price instability, security issues, and market manipulation.
3. Potential for illegal activities: Cryptocurrencies can be misused for tax evasion, money laundering, terrorist financing, and hacking.
4. Risk to financial systems: There is a fear that cryptocurrencies could destabilize existing financial systems, posing a threat to the nation’s economy.
Regulatory Roadmap for Cryptocurrencies
Vietnam has been actively working towards regulating its cryptocurrency space. In August 2017, Prime Minister Nguyen Xuan Phuc approved a project to establish a legal framework for managing digital assets.
On April 11, 2018, a directive was issued to relevant authorities to manage crypto transactions and analyze their impact on the economy. While the directive banned the use of Bitcoin and similar cryptocurrencies for payments, individuals were still allowed to invest in them. Violating this directive could result in fines of up to VND 200 million ($9,000).
In February 2019, the Ministry of Justice reviewed the current legislation on crypto-related businesses and proposed three different policies for the government to consider. These policies ranged from a more flexible approach to stricter regulations under specific conditions.
Most recently, on May 11, 2020, the Vietnamese Finance Ministry approved the establishment of a research group to analyze, review, and develop regulatory policies for crypto-assets. This group, led by the Vice-Chairman of the State Securities Commission, will consist of members from various departments, including the General Department of Taxation and the National Institute of Finance.
Taxation and Mining
Taxation of Cryptocurrencies
As cryptocurrencies are not considered legal tender in Vietnam, there are currently no specific tax policies in place for them. In a notable case, the tax authorities lost a lawsuit against a citizen who was being taxed on their Bitcoin earnings. The court ruled that cryptocurrencies are not recognized as legal assets under Vietnamese law, therefore the authorities had no right to tax them.
Mining of Cryptocurrencies
Mining of cryptocurrencies is currently illegal in Vietnam due to the country’s restrictions on their use as a payment method. The government even passed a law banning the import of bitcoin mining equipment into Vietnam.
However, the Ministry of Industry and Trade expressed dissatisfaction with the ban and highlighted concerns over the decline in the mining business. They proposed that the import of mining equipment should be allowed since it was not included in the list of banned or unsafe imports. The government accepted this proposal.
Key Events
Here are some notable events related to cryptocurrency regulations in Vietnam:
– May 11, 2020: The Vietnamese government establishes a research group to review and develop regulatory frameworks for crypto assets.
– November 17, 2019: Japan’s SBI Ripple Asia and SBI Remit partner with Tien Phong Commercial Joint Stock Bank to launch a Japan-Vietnam money transfer service using RippleNet.
– November 12, 2019: The State Bank of Vietnam works on a new decree to regulate cryptocurrencies.
– July 26, 2018: The State Securities Commission tightens regulations on cryptocurrencies, banning public companies, securities companies, fund management companies, and securities investment funds from dealing with digital assets.
– July 19, 2018: The government accepts the suspension of crypto mining equipment imports proposed by the Ministry of Industry and Trade.
– April 13, 2018: In response to a fraud case resulting in a loss of $658 million, the Vietnamese government issues a directive to tighten cryptocurrency activities in the country.
– October 28, 2017: The State Bank of Vietnam and the Central Bank of Vietnam ban the use of digital currencies as a mode of payment, effective from January 2018. However, investments in digital currencies are not prohibited.
– February 27, 2014: The State Bank of Vietnam issues a warning against investing in cryptocurrencies or engaging in transactions due to the associated risks of criminal activities. It also declares that virtual currencies are not legal tender.
Conclusion
The Vietnamese government has taken a progressive approach towards regulating cryptocurrencies, but there is still a need for more comprehensive laws and reforms. These measures will ensure the secure flow of cryptocurrency transactions in the country, protecting investors from scams and fraud. Once these regulatory frameworks are in place, the future of cryptocurrencies in Vietnam will be more secure and reliable.
FAQs (Frequently Asked Questions)