Vietnam to pilot virtual currency as crypto thrives in gray zone


HO CHI MINH VILLE – After years of warning its citizens not to “gamble” with virtual money, the Vietnamese government has decided to explore the creation of its own digital currency.

The surprise policy decision was buried at the bottom of the Prime Minister’s Decision 942, which sets out a strategy to digitize government by 2030. Released last month, it directs the State Bank of Vietnam to research, “expand and drive the use of currency based on blockchain technology. “

The move comes amid a massive crackdown on private cryptocurrencies elsewhere, from a crackdown in China that brought bitcoin prices down last month, to a UK ban on the Binance trading platform. and warnings from other countries.

In Vietnam, the use of cryptocurrencies to make purchases is illegal, but they are still actively purchased as investment instruments – the country ranks in the top three in the world as a percentage of people who report holding a form. crypto asset, according to a Statista survey. Stores have also sprung up around Ho Chi Minh City using “bitcoin” in their names or offering to accept currency as a means of attracting customers.

Hanoi’s foray into digital currency doesn’t mean it will soon replace the country’s magenta and blue banknotes. This also does not bode well for a friendly attitude towards speculators on the part of the government. As recently as March, the state bank was reminding people that crypto is not legal tender.

A cafe in Ho Chi Minh City capitalizes on the cryptocurrency craze with its logo. (Photo by Lien Hoang) © Link Hoang

What the blockchain pilot program seems to indicate is that the state has decided it cannot ignore the cryptocurrency mining and trading frenzy that took off during the coronavirus pandemic as people unemployed or stuck at home looking for new sources of income.

Instead, experts say, the government is looking for ways to regulate new technology.

Binh Nguyen Thanh, FinTech-Crypto Hub coordinator at RMIT University of Vietnam, said Decision 942 opens the door to the possible creation of a central bank digital currency, which would allow authorities to control virtual money rather than leaving it to decentralized software and private companies.

“I think they will take a look at how the experience goes in other countries,” Thanh told Nikkei Asia. Cambodia has launched a state-backed digital coin, while neighbors from China to Thailand are debating similar action.

He expects Vietnam to form a task force made up of different agencies, from the state bank to the justice ministry, to collect information on blockchain and digital currencies from the central bank. The government has planned a fintech regulatory sandbox – a controlled environment for testing new technologies – and a digital currency pilot could be added to it, Thanh said.

Decision 942, he was careful to note, does not legalize cryptocurrency trading.

Nonetheless, it remains popular, according to Lynn Hoang, Vietnamese director of Binance, the world’s largest crypto exchange.

She said in April that the country was among the top 10 users of her company’s market.

“The users in Vietnam, they are ready to try new things,” she said in an interview, adding, “We are working with the regulators. So far, we don’t see any problems in Vietnam.”

The cryptocurrency market remains in a gray area and is difficult to regulate, Thanh said. But the Southeast Asian country is unequivocal that fiat currency is the only legal tender.

The state bank’s missive in March included warnings that crypto people risked falling prey to pyramid schemes, criminal use of virtual money, and volatility in exchanges.

“The use of bitcoin as a means of payment in Vietnam is a violation of the law,” he said, “and may be subject to administrative or criminal penalties”.

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