July 2, 2022
  • July 2, 2022

A future for cryptocurrency in Vietnam?

By on June 7, 2021 0

Cryptocurrency refers to a wide range of technological developments that use a technique better known as cryptography. Simply put, cryptography is the technique of protecting information by transforming it (i.e. encrypting it) into an unreadable format that can only be decrypted (or decrypted) by someone who has a secret key. Cryptocurrency is secured using this technique using an ingenious system of public and private digital keys. However, no generally accepted definition has been agreed so far. In particular, the World Bank has classified cryptocurrencies as a subset of digital currencies, defined as digital representations of value denominated in their own unit of account, distinct from electronic money, which is a simple digital payment mechanism. , representative and denominated in fiat currency. Meanwhile, the European Banking Authority has suggested designating cryptocurrencies as virtual currencies, which it defines as digital representations of value that are neither issued by a central bank or public authority nor necessarily to a currency. fiduciary but are used by natural or legal persons as a medium of exchange and can be transferred, stored or traded electronically[1].

There is no definition of cryptocurrency in the laws of Vietnam. Nonetheless, the cryptocurrency has proven its popularity in Vietnam, after a report on the results of a survey released by Statista, a global provider of market and consumer data, indicates that 21% of those surveyed in Vietnam said they used or owned cryptocurrency in 2020, second to Nigeria (32 percent).

However, there are some restrictions when it comes to cryptocurrency in Vietnam, including its regulation.

Is cryptocurrency considered legal property or a payment instrument in Vietnam?

Under Vietnamese laws, cryptocurrency is neither a legal property nor a payment instrument.

In particular, under article 105 of the 2015 Civil Code, ownership is defined as follows:

1. Ownership includes objects, money, valuables and property rights.

2. Property includes real estate and movable property. The real and movable goods can be existing goods or goods on plan ”.

Article 17 of the Law on the State Bank of Vietnam provides that “the State Bank of Vietnam is the only agency authorized to issue Socialist Republic of Vietnam banknotes and coins. Banknotes and coins issued by the Stale Bank of Vietnam are legal means of payment in the territory of the Socialist Republic of Vietnam”.

In addition, article 1 of decree n ° 80/2016 / ND-CP, amending decree n ° 101/2012 / ND-CP, relating to payments other than in cash provides that “NOTcash payment instruments in payment transactions (hereinafter referred to as payment instruments), including checks, payment orders, recovery orders, bank cards and other payment instruments as prescribed by the Bank of ‘State of Vietnam. Illegal payment instruments are payment instruments not included in clause 6 of this article”.

In practice, the State Bank of Vietnam has so far not defined or named “other payment instruments”. Consequently, only checks, payment orders, collection orders, bank cards or any other means of payment named or defined by the State Bank of Vietnam are means of payment. Since cryptocurrency has never been named or defined as a payment instrument by the State Bank of Vietnam, it is not considered a legal payment instrument other than cash.

In addition, on July 21, 2017, the State Bank of Vietnam reaffirmed its opinion on the legal status of cryptocurrency in Vietnam, when issuing Dispatch No. 5747 / NHNN-PC to the government office in answer to a question about Bitcoin, Litecoin and other virtual currencies. In particular, the Dispatch declared “As stipulated in Vietnamese law, cryptocurrencies in general, or Bitcoin and Litecoin in particular, are not currencies and do not act as legal means of payment.”

More recently, the State Bank of Vietnam issued a directive[2], requiring bank card issuers, intermediary payment service providers and representative offices of foreign banks to supervise, inspect and control card transactions carried out at merchants in order to prevent, among other things, card transactions that do not comply with the provisions of the laws (relating to winning games, gambling, betting, foreign exchange transactions, securities, virtual or digital currency, etc.)

What are the risks associated with trading cryptocurrency in Vietnam?

Currently, the Vietnamese government has not yet issued a license to any organization wishing to conduct cryptocurrency business in Vietnam.

At a press conference on monetary policy and banking in the first quarter of 2019. Mr. Nghiem Thanh Son, deputy director of the payments department of the State Bank of Vietnam verbally asserted that the State Bank of Vietnam Vietnam had not yet issued any licenses to any company wishing to do cryptocurrency business in Vietnam.

The exploitation of a cryptocurrency activity has been excluded by Vietnam from the WTO’s list of commitments, and in the absence of Vietnamese legislation on this type of activity, any investor wishing to do crypto business – Currency in Vietnam is requested to consult and obtain approval from various relevant authorities. in Vietnam, including the Ministry of Planning and Investment, the Ministry of Finance, the State Bank of Vietnam; and any other relevant ministry (if applicable) in accordance with clause dd, article 10, decree 118/2015 / ND-CP.

Doing cryptocurrency business in Vietnam without a license will be subject to administrative penalties according to the laws of Vietnam. Specifically, any investor doing cryptocurrency business in Vietnam without a license will be subject to an administrative penalty of VND 50,000,000 to VND 100,000,000 and the credit institution’s foreign exchange operations will be suspended for three to six. month.

In addition, according to point h, Clause 1, article 206, Penal Code 2015 (amended and supplemented by the Penal Code 2017) relating to the violation of the legal provisions relating to banking operations and related activities, as of January 1, 2018, any person who commits acts including the issuance, supply or use of payment instruments causing damage to other persons (including businesses) of 100,000,000 VND to 300,000,000 VND will be liable to a fine of 50,000,000 VND to 300,000,000 VND or imprisonment for six months to three years.

A future for cryptocurrency in Vietnam?

Cryptocurrency is revolutionizing the global payments industry, allowing online payments to be sent directly from one party to another without going through a financial institution serving as a trusted third party to process electronic payments. Backed by an electronic payment system based on cryptographic evidence instead of trust, it avoids the weaknesses inherent in the trust-based model.

However, Vietnam appears to be taking very cautious steps towards the cryptocurrency, as the cryptocurrency would have no government oversight and therefore would be subject to illegal activities, such as tax evasion, money laundering, financing of terrorism and hacking, and that cryptocurrency could have the capacity to destabilize the existing one. financial systems that can affect the country’s economy.

While the trade and use of cryptocurrency is booming around the world in terms of popularity, Vietnam cannot stay out of the game, and one of the most recent actions in response to crypto -currency is that the Ministry of Finance established a research group on March 30, 2021, led by Mr. Pham Hong Son, Vice Chairman of the State Securities Commission, to conduct an in-depth study of cryptocurrency, with a view to carry out legislative reform for industry in the country.

In practice, the current transition of the Vietnamese economy offers a particularly favorable context for cryptocurrency, while cashless payment is increasingly present with many applications, QR codes and electronic wallets such as Moca, Momo or ZaloPay. Cryptocurrency research appears to be supported by Directive No. 22 / CT-TTg of May 26, 2020 providing for measures to accelerate the implementation of a non-cash payment development scheme in Viet Nam, after 5 years of implementation of Decision n ° 2545 / QD-TTg of December 30, 2016, approving a development plan for non-cash payment for the period 2016-2020 with an ambitious objective of reducing the cash / total means of payment less than 10%.

Even with the Vietnamese government’s recent active responses to the cryptocurrency boom in Vietnam, the future of cryptocurrency is not secure and reliable in the country until regulatory frameworks are put in place. .