Hi, I’m Qadir A.K., Crypto lover and Research Columnist.
The next part of my series, “The Cryptocurrency Breakthrough 2020 – Synopsis 21” – Welcome to the Cryptocurrency Regulations in Vietnam
Cryptocurrency arrived in Vietnam in 2009, and the likes for Bitcoin, Ethereum, Litecoin, and Ripple began to appear as alternatives to cold cash. People were looking for different ways to transfer and receive money from an offshore bank account without any hassle. & found a better option in heavy fees and cryptocurrencies. Vietnamese Government on Cryptocurrencies
Vietnam is one of the fastest growing economies in the world with a good G.D.P. The government has established a clear vision to provide comprehensive support for the use of digital technologies in the country by providing the necessary requirements to local blockchain and crypto companies.
Do you know!!! About half of startups in Vietnam come from the blockchain and crypto sector, which is expected to advance further in 2019 and 2020.
In addition, Vietnamese government officials are working on possible applications of blockchain technology in the country. Blockchain for Vietnam’s Cashless Community
Vietnamese Deputy Prime Minister Vuong Dinh Hue signed a policy decision in 2017 setting out the government’s plan to reduce cash transactions in the country to less than 10%. The State Bank of Vietnam also announced the development of its $700 million cashless payment network in conjunction with South Korean payment service provider Alliex.
Going a step further in the use of blockchain technology, another bank called Tien Phong Commercial Joint Stock Bank (TPBank) has joined hands with Japan’s SBI Ripple Asia to develop the Ripplenet blockchain-based global payment network for processing cross-border transactions. Blockchain-based Smart City in Vietnam
In 2017, the Vietnamese government launched the smart city project with the aim of transforming the cities of Ho Chi Minh and Hanoi into Smart Cities by 2020 and 2030, respectively. The smart city project will be built with technologies such as blockchain, 5G and facial recognition. Law on cryptocurrencies
Cryptocurrencies are not accepted as a legal means of payment in Vietnam, but they are allowed to buy, hold, and trade. Government officials are still reassessing their approach to the crypto space. However, the country’s central bank has made it clear that it does not consider these to be legal tenders. What led to looking at the necessity of regulations?
The Vietnamese government puts forward many official reasons for the need for regulations and prohibits them as a means of payment,
- The crypto industry has no state oversight and is therefore prone to illegal activities.
- Cryptocurrencies lack customer protection as they are volatile in nature, leading to price instability, security concerns and market manipulation.
- Cryptocurrencies are vulnerable to illegal activities such as tax evasion, money laundering, terrorist financing and hacking.
- Cryptocurrencies may have the capacity to destabilize existing financial systems that could affect the country’s economy.
Regulatory Roadmap of Cryptocurrencies
Vietnam has made several attempts to regulate the country’s cryptocurrency space. Prime Minister Nguyen Xuan Phuc approved a project to complete the legal framework for managing digital assets and activities on August 21, 2017.
On April 11, 2018, the directive was given to the relevant authorities to manage crypto transactions in order to analyze the negative impact on the country’s economy. In the directive, Bitcoin and similar cryptocurrencies are banned due to their use as a payment method for any good or service. But users were free to invest in cryptocurrencies. Those found guilty will be fined up to VND 200 million ($9,000).
In February 2019, the Ministry of Justice, a government agency responsible for developing and enforcing rules and regulations in the country, also submitted a report reviewing the current legislation on crypto-related business in the country. They proposed three different policies that the government could consider and start working on the policy chosen by the government. They
Recently on May 11, 2020, the Ministry of Finance of Vietnam approved the establishment of a research group to review, analyze, and improve various regulatory policies related to crypto assets. The research group will consist of nine members of the group of the following departments,
- General Tax Office
- Institute of National Finance
- General Department of Customs of Vietnam
- Ministry of Banking and Financial Institutions of the State Bank of Vietnam
The research group will be chaired by State Securities Commission Vice Chairman Pham Hong Son. Taxation and MiningTaxes on Cryptocurrencies
Since you already know that Bitcoin and other cryptocurrencies are not considered legal tender and are prohibited from using them as a form of payment, tax policies are not yet framed either.
Tax authorities have lost a lawsuit filed against a local citizen who was taxed on his Bitcoin earnings. Since cryptocurrencies are not considered a legal entity under Vietnamese law, court officials ruled that they did not have the right to tax it. Cryptocurrency Mining
Cryptocurrencies remain illegal for the time being and are limited to the use of payment methods and therefore mining. The government has also passed a law banning the import of bitcoin mining equipment into Vietnam.
But the Ministry of Industry and Trade expressed displeasure with the ban and also expressed concern about the decline in the mining business. The ministry sent a proposal to the Prime Minister of Vietnam called Document 5964/BTC – TCHQ, stating that mining equipment was not included in the banned import or unsafe list. Therefore, imports accepted by the government should be allowed. Sequence of events
11-05-2020:- The Government of Vietnam has established a research group to study and access crypto assets, as well as develop a regulatory framework for digital assets.
17-11-2019:- Japan SBI Ripple Asia and SBI Remit announced a partnership with Tien Phong Commercial Joint Stock Bank of Vietnam to develop its Japan-Vietnam Money transfer service using RippleNet DLT.
12-11-2019:- The State Bank of Vietnam (SBV) is working on a new decree to regulate cryptocurrencies.
26-07-2018:- The State Securities Commission has tightened its approach to cryptocurrencies. It has banned public companies, securities firms, fund management companies and securities investment funds from engaging in digital assets and activities, and has asked them to comply with legal regulations on anti-money laundering law.
19-07-2018:-The government has agreed to the suspension of the import of crypto mining equipment proposed by the Ministry of Industry and Trade.
13-04-2018:– Following a scam that resulted in the loss of $15 Trillion Vietnamese Dong ($658 million), the Vietnamese government has issued an instruction to government ministries and the central bank to tighten cryptocurrency activities in the country.
28-10-2017:- The State Bank of Vietnam and the Central Bank of Vietnam have banned the use of digital currencies as a payment method, which will be effective from the beginning of 2018. However, there was no prohibition on investments in digital currencies.
27-02-2014:- The State Bank of Vietnam has issued a warning against investing in cryptocurrencies or taking any action due to the harmful risks involved in criminal activities. It was also found that cryptocurrencies are not considered legal tender. Conclusion Note
The Government of Vietnam has now taken a progressive approach to regulating cryptocurrencies and has taken several steps. However, various other approaches are still vague and lack clarity.