Bitcoin regulation headaches reemerge in Vietnam

While Vietnam originally made Bitcoin transactions illegal, the government issued a directive in August tasking relevant agencies with preparations to complete a legal framework to manage the cryptocurrency.

The agencies were required to identify the appropriate regulatory measures to oversee Bitcoin and other ‘virtual assets’ by August 2018 and complete the legal framework to enact those measures by June 2019, according to the directive.

However, the State Bank of Vietnam announced late last month that Bitcoin is banned in the country and those who do business using the currency will be subject to fines or even criminal charges.

In a media statement on October 28, the central bank asserted that Bitcoin and other types of cryptocurrency are not considered as legal modes of payment in Vietnam, and the issuance, supply, and use of Bitcoin and other virtual currencies are prohibited in the Southeast Asian country.

Those breaching this regulation will be subject to a fine of between VND150 million (US$6,575) and VND200 million ($10,959), in accordance with a decree on penalties in the monetary and banking sector.

The announcement came after Le Truong Tung, president of privately-owned FPT University, announced that the institution “accepts tuition payment in Bitcoin,” calling the payment in the cryptocurrency a “feasible solution” for many international students.

Following the latest announcement of the central bank’s position, Tung defended that FPT University “only planned to” accept tuition in Bitcoin and has yet to enact the payment method in practice.

With the central bank reiterating its position that Bitcoin is outlawed, FPT University will “form a research group on Bitcoin” as it believes that “cryptocurrency is an issue that shouldn’t be ignored during these times of the Fourth Industrial Revolution.”

To ban or not to ban

While the State Bank of Vietnam is unlikely to recognize Bitcoin as a legal mode of payment, the ‘underground world’ of Bitcoin investors and ‘miners’ in Vietnam is quite active.

The central bank only bans the use of Bitcoin as a means of payment, which means investors in the currency are still able to store and exchange the cryptocurrency as an asset, not a currency unit, without violating the law.

Regulating Bitcoin is a headache suffered not only by Vietnam, according to Associate Professor Nguyen Khac Quoc Bao, dean of the finance department of the University of Economics Ho Chi Minh City.

“The world is still unable to find, or to be more precise, come to a mutual decision on how to treat this special form of currency,” Bao said.

“People around the world are arguing over the nature of Bitcoin as a currency, and whether it should be accepted in official transactions.”

Economic expert Ngo Tri Long said the first problem that needs solving is whether Bitcoin should be treated as goods or a currency.

In the meantime, Vietnam may look to other countries to form its official policy.

In early September, Russian finance minister Anton Siluanov said his ministry expects to finish working on a law that would define a procedure for buying cryptocurrencies, including the registration of entities willing to buy the virtual money, by the end of this year.

Siluanov said Russia’s government understands that cryptocurrencies are real and there is no sense in banning them, but instead, there is a need to regulate them, according to Reuters.

“The buying of crypto-currencies should be similar to buying securities, such as treasury bonds for households launched by the finance ministry this year,” Siluanov was quoted by Reuters.

China has banned Bitcoin and other cryptocurrencies since September 30, but there are signs that the ban will soon be lifted.

Analysts believe that Bitcoin has the potential to replace China’s currency in everyday transactions and as a store of value in the long term, according to Forbes.

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