Last week, Vietnam’s Central Bank officially stated in a Word document that it does not support Bitcoin any longer. The note, which does not necessarily outline a law (adding a new law in Vietnam is a longer process), says that Bitcoin is not recognized or protected by law in Vietnam, making it functionally illegal.
We can therefore add Vietnam to the list of Asian countries that do not recognize Bitcoin as a viable currency, including India, China, and Indonesia. For those interested, Wikipedia has a nifty list of countries and their legal position on Bitcoin. It’s likely that we will see a continuing trend of illegalizing Bitcoin across the region. The note from the Vietnamese Central Bank brings up some fairly reasonable concerns for a currency that, in the press, has received a bad rap from the masses. So, for your viewing pleasure, we have translated the four main points from the Central Bank:
- All the Bitcoin exchanges that allow users to trade anonymously, and therefore can be used to clean dirty money, sell drugs, hide from taxation, exchange, and pay for illegal activities.
- Services that host Bitcoin have been shown to be have the high potential to be hacked, stolen, or have the database changed, or the exchanges stopped. Actually, in the beginning of 2014, the value of Bitcoin significantly decreased when two of the biggest Bitcoin exchanges in the world, Mt. Gox and BitStamp, temporarily didn’t allow customers to pull out their money due to technical difficulties. The US government also caught four suspects for illegal activities connecting to Bitcoin. On February 25, Bitcoin exchange Mt. Gox suddenly closed with hundreds of millions of US dollars worth of bitcoin being stolen.
- Due to the fluctuating nature of Bitcoin and the complications that can occur in a short time, Bitcoin is therefore a bubble and is unpredictable and dangerous for investors.
- Bitcoin is not regulated by any institution or country worldwide, therefore users of Bitcoin will not be protected and will have to shoulder the burden themselves of damages due to Bitcoin’s volatility.
The last note from the Central Bank is particularly telling:
Thus, the Central Bank of Vietnam has warned organizations and individuals to not invest in Bitcoin, keep Bitcoins, use services connected to Bitcoins, and other cryptocurrencies.
These four points are fair, given the news cycle on Bitcoin
These four points from the Central Bank are certainly fair, given the international press on Bitcoin as of late. With its unpredictable volatility and the hunt for the perpetrators of the Silk Road heist in the USA, it’s no doubt a concern for Vietnam, which also wants to make sure such illegal activities don’t have a footing. Vietnam has especially strict policies on drug enforcement and corruption, which has recently resulted in death penalties for two executives in a corruption scandal. It is therefore within the Vietnamese Central Bank’s interest to nip the bud before something worse blooms, with Bitcoin at the heart of possibly more corruption.
At the same time, Bitcoin may be a missed opportunity for Vietnam, a country which is hungry to jumpstart its economy and gain more access to foreign business. The statement by the Central Bank could be a safe way to cover Bitcoin until proper legislation can be passed when the currency is evaluated in the future to be totally malignant or potentially benign.
Bitcoin usage in Vietnam is quite rare
On the other hand, it seems that the Bitcoin community in Vietnam is ignoring the new declaration and proceeding as before. The few websites that exchange Bitcoins, including MuaBitcoin.com, meaning “Buy Bitcoins”, are still in operation. But realistically, Bitcoin in Vietnam is still in its early stages. There is a cafe in Hanoi, the capital, that currently accepts Bitcoins, and some undisclosed online businesses that are considering supporting it, despite the ban.
The irony for Bitcoin, of course, is that it is quite difficult to regulate and therefore enforcement of the Central Bank’s concerns will be difficult. It will no doubt stifle any widespread growth of Bitcoin though, especially given that the majority of the country is still alien to credit cards and online payments. It will be hard to convince others to try out Bitcoin, especially now that any organizations that are willing to exchange Bitcoin will have to now operate more quietly.
(Editing by Terence Lee)