Blockchain and cryptocurrency have become an increasingly common part of our lives in 2020. Even if you don’t use cryptocurrency or blockchain platforms, you have most definitely heard of them.
Naturally, countries around the world are starting to embrace these innovations and are creating legal frameworks that support the adoption and development of their respective markets. Exchanges, ICOs, virtual currencies, cryptocurrency brokers, blockchain apps – the list of emerging businesses continues to expand exponentially.
Legal Uncertainties
Arguably, the Vietnamese authorities have taken a rather cautious approach to these sectors. Following a series of scams and scandals targeting Vietnamese citizens, regulators have been hesitant and even hostile towards innovative fintech.
A ban on crypto took place in October 2017, when the Vietnamese government issued a decree relating to virtual currencies. It stated that they did not consider Bitcoin and other cryptocurrencies as legal means of payment. This essentially made it illegal to use, trade, issue, or supply cryptocurrencies in the country, punishable by a fine of around $9000. Then, in 2018, the Vietnamese State Securities Commission (SSC) banned businesses from opening crypto brokerages. It also prohibited corporate entities from transacting and trading in virtual currencies. At this point, it seemed like Vietnam’s cryptocurrency dream was over – but, eight months later, things took a surprising turn.
Vietnam’s First Crypto Exchange License
In March 2019, a partnership between two companies resulted in the Vietnamese government doing a u-turn. In a move that surprised the industry, they issued authorization for the country’s first cryptocurrency exchange. Brokerages remained illegal, but there was hope that this would mark a change in the regulatory environment. Swiss company KRONN Ventures AG teamed up with Vietnamese firm Linh Thanh Group. They applied for and acquired a license, launched a platform, and announced their intent to create digital currency as well.
However, nothing has been heard from KRONN or the Linh Thanh Group since. A quick check on both companies’ websites provides no mention of the other company, the project, or exchange in Vietnam. Instead, those wishing to buy cryptocurrency use platforms such as Binance (which launched Vietnamese dong as a trading pair), local sellers, or Bitcoin ATMs. In the meantime, no further licenses have been issued and there appears to be little interest from other exchanges or brokerages to set up in Vietnam. Perhaps this is helped by how people in the country are still allowed by law to speculate on the price of cryptocurrencies in other ways.
Meanwhile, while forex brokers are banned, citizens may use ones that are located offshore. In terms of cryptocurrency, both brokers and exchanges are not authorized to operate in the country. Vietnamese citizens and residents are, however, allowed to use the services of providers based in other jurisdictions. This means that those wishing to buy, sell, or trade cryptocurrency online may do so as long as the broker is not local. Per TopRatedForexBrokers’ feature on brokers that operate in Vietnam, as well as providing forex trading, most of the well-known names like eToro, Vantage FX and xtb offer trading in fiat-crypto pairs as well as crypto-crypto. Users can specify that they are in Vietnam and the site will provide a list of brokers that offer their services there. This means, that despite the government’s generally suspicious approach to crypto, citizens can still legally access and take part in the global market.
Blockchain in Vietnam
None of this means that the idea of cryptocurrency in Vietnam is over, though. Behind the scenes, blockchain – the technology that powers crypto – is booming. Binance had scheduled a Blockchain Week between 29 February and 4 March. Due to the pandemic, the event was canceled and the company said a new date would be forthcoming. Additionally, Vietnam-based bank HDBank became the latest financial institution to join the Contour network. The initiative aims to streamline credit letter issuance via blockchain and smart contracts.
Eight other big-name banks including CTBC Holding, HSBC, Standard Chartered, ING, BNP Paribas, Citi, SEB, and Bangkok Bank have all signed up to be a part of the platform. Contour is scheduled to go live in the second half of this year. Vietnam has also become a hotbed for blockchain developers, enthusiasts, innovators and entrepreneurs. While blockchain is still unregulated by the authorities, legislation is expected as it could provide a much-needed financial boost to the country.
The application of blockchain technology could significantly streamline Vietnam’s main industries – services, manufacturing and agriculture. This means that widescale adoption of distributed ledger technology has the power to propel the economy far beyond its current state. The alternative is that the continued hesitance of the authorities and regulators could hamper much-needed economic growth.