Cryptocurrency regulation in Vietnam
Vietnam, which is still considered to be the developing country in the world economy, in fact leads Southeast Asia in terms of digital technologies and its young and digitally savvy population is eager to adopt innovative digital financial solutions, including cryptocurrencies. Moreover, about a million Vietnamese already use cryptocurrencies: this figure is expected to grow 30 times by 2030. A critical component of Vietnam’s success to date in the fintech industry is the progressive attitude of its government and regulators towards innovation, with Vietnamese government institutions such as the National Technological Innovation Foundation and the Fintech Steering Committee actively encouraging innovation. However, there is no regulation of the cryptocurrency industry in Vietnam. The Vietnamese government understands the prospects and potential of a rapidly growing cryptomarket, therefore, at this stage, an appropriate institutional regulation is being developed, the completion of which is planned for 2022-2023.
Being the main financial regulator in Vietnam, The State Bank of Vietnam (hereinafter: – “SBV”), issued a decree on July 21, 2017, in which it expressed the position of the Vietnamese government on the issue of virtual currencies. Hereby, SBV stated that virtual money is not a currency and is not legal tender based on clause 2, Article 17 of the Law on State Bank of Vietnam 2010.
SBV focuses on administrative and criminal liability for the use of cryptocurrency as a means of payment as per clauses 6 and 7, Article 4 of Decree 101/2012/ND-CP dated November 22, 2012 of the Government on non – cash payments ( amended and supplemented by Decree 80/2016 ) /ND-CP) which stipulates that ‘Non-cash payment instruments used in payment transactions, including: checks, payment orders, payment authorization, collection request, collection authorization, bank card and other means of payment according to regulations of the State Bank.. While clause 6, Article 6 of the specifies the meaning of the prohibited acts: ‘Issuing, providing and using illegal means of payment’.
Pursuant to the above provisions, the SBV argued that virtual currencies are not currencies and are not legal means of payment according to the provisions of Vietnamese law. Issuing, supplying and using virtual currency in general and Bitcoin and Litecoin in particular (unlawful means of payment) as currency or means of payment is prohibited. Sanctions for handling this behavior were specified in the Government’s Decree 96/2014/ND-CP on sanctioning of administrative violations in the monetary and banking sectors and the 2015 Penal Code.
According to the provisions of the Penal Code 2017 (Law amending and supplementing a number of articles of the Penal Code No. 100/2015/QH13) , at point h, Clause 1, Article 206 amending the offense Violating regulations on banking activities, other activities related to banking activities VND to less than 300,000,000 VND (EUR 11,568,21), the offenders shall be subject to a fine of between VND 50,000,000 (EUR 1,928 ) and 300,000,000 (EUR 11,568,21) or an imprisonment term of between 6 months and 3 years for illegally issuing, supplying, using payment means; forging payment vouchers, payment means; using payment vouchers, fake payment means.
In addition, about investing in virtual currency, the State Bank of Vietnam has warned many times that this investment carries huge risks for investors. To get a general picture of the legal status of cryptocurrencies in Vietnam, it can be briefly summarized that there is no legal definition of cryptocurrencies and cryptocurrencies are not yet explicitly recognized as an asset/property or a means of transaction.
The fundamental legislation of countering terrorist financing and money laundering is money laundering law. The activity of exchanging, buying and selling virtual money on virtual currency exchanges is outside of the regulative scope of the law unless specified by any of authorities, including AML requirements.
The State Bank is developing the draft Law on Combating Money Laundering and reviewing the matter with the relevant ministries and departments.
In accordance with existing law, the entity engaged in the business of Virtual Asset services is required to develop and implement an anti-corruption mechanism and comply with antitrust obligations such as identifying and updating customer information, reporting suspicious transactions, etc., thereby minimizing the risk of money laundering, contributing to the health, safety and stability of the national financial system.
The registration of a cryptocurrency company in Vietnam was not directly prohibited, even if it is not clarified in the relevant law or judicial practice, hence, in relation to the principle of freedom, allows the activities of such companies.
There is a comment from the Department of E-Commerce and Architecture on the issuance of registration and licensing of cryptocurrency companies, stating that the Ministry of Industry and Trade does not confirm registration or notify e-commerce websites for websites that allow financial investment, provide foreign exchange and electronic money products in the form of e-commerce trading floors or e-commerce websites sell.
But the government seems to favor and encourage the application of blockchain technology, recently, as the government issued Decree No. 942/QD-TTg dated June 15, 2021, approving the strategy for developing e-government towards digital government for 2021-2025 with a focus on 2030. The decree instructs the State Bank of Vietnam to research, develop and pilot the use of virtual currencies based on blockchain technology. With this new pilot program, the government plans to issue a central bank digital currency in the form of stablecoin. The value of this new virtual currency, codified and put into practice, will depend on the decision of the government, and not fluctuate in price depending on the market, like other cryptocurrencies. It should be noted that in March 2021, the Ministry of Finance of Vietnam announced the establishment of a research group on virtual assets and virtual currency in order to develop an appropriate policy and management mechanism for them. The new 5 year strategy might be the sign of the government’s efforts to legitimize usage of cryptocurrency and decentralized technologies. It will be interesting to see what further steps the government takes to respond to this emerging trend. While for now, the virtual currencies remain to be less favorable means of investments that lack appropriate legal protection in Vietnam.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation
Author: Ganna Voievodina, a licensed attorney,
СЕО and co-founder of Manimama Legal & Growth Agency