In the fast-paced world of Crypto, you can make or lose a vast amount of money within a blink of an eye. In November 2022, the world’s second-largest Crypto, FTX, was valued at more than $30 billion. By November 14, FTX collapsed.
The event shook the volatile crypto market severely. Millions of investors across the world took the hit. People who likely thought their assets were safely held got shocked to see their investments disappearing.
But for the Vietnamese, can this be the end of the beginning for Crypto? After the collapse of FTX, where is Vietnam’s crypto market today? Keep scrolling down to learn more.
Vietnam’s Crypto before the fall of FTX
Cryptocurrency has seen massive popularity in Vietnam, making its way into the mainstream media, gambling sites, e-Commerce and the gig economy. This love for crypto started way before FTC launched.
Back then, crypto enthusiasts in the country would invest in bitcoin mining. To date, Vietnamese traders still mine crypto. Others have ceased mining but they love to talk about it.
That being said, the fall of FTX made a lot of Vietnamese unhappy. Not only did the FTX collapse made millions of Vietnamese lose their money, but the event also pushed digital currencies down.
A few weeks after the fall of FTX, Bitcoin also lost 20% of its value and sank below $15,700. On the other hand, Ethereum also lost its worth by more than 20%.
Compared to other crypto crashes, like Luna, the fall of FTX is more detrimental because it is an extensive exchange. Many Vietnamese invested in this exchange because it offered better interest rates. The meltdown was too sudden and could never be controlled, resulting in billions of losses for even seasoned crypto traders.
Thousands of traders were involved in FTX’s Facebook and Telegram community when it was running smoothly. Unfortunately, members reported losing millions of dollars because they could not make timely withdrawals.
Details about how the assets sunk are not clear. But one source said the FX exchange was hacked, and all money dried up.
Why has Crypto proven so famous in Vietnam?
Vietnam is one of the developing countries where cryptocurrency has played a significant role. The country has more than 600,000 Vietnamese living in the diaspora. According to the Ministry of Labor, Invalids and Social Welfare, these people send over $3.5 billion yearly.
The transaction fee is often costly for Vietnamese who frequently transfer money to their families. The charges usually include administrative costs and exchange rates.
Exorbitant fees made crypto transfers an ideal option for sending money. Although cryptos come with some transaction fees, they often pale compared to other financial institutions. Even better, Crypto doesn’t rely on an intermediary to complete the transaction. This makes it more efficient.
But it is not all about remittances that hype Crypto in Vietnam; the rising popularity of GameFi also contributed to the growth of Crypto. According to statistics from Google, Vietnam ranks number one in developing applications and games in Southeast Asia.
During the pandemic, the Vietnamese Ho Chi Minh City-based Axie Infinity game offered players lots of crypto tokens. It is no surprise that the game reached a $3 billion evaluation.
This is perhaps one of the reasons why many Vietnamese made a mad rush into the crypto sector. Also, the non-legalization of gambling in Vietnam contributed to the growth of Crypto. Other factors that led to the crypto boom in Vietnam include;
Massive unbanked population
An expansive segment of the Vietnamese population has limited access to financial institutions. A study by Statista in 2021 showed Vietnam ranking second among the top unbanked countries. That means about 69% of the population lacks banking services.
Other statistics show that about 61% of the country’s population lives in rural areas, where access to modern financial services is limited.
No cryptocurrency taxes
Unlike other jurisdiction regions where Crypto is taxed, Vietnam has no crypto taxes. Currently, the Vietnamese government doesn’t recognize Crypto as a legal tender. The country’s tax authorities also show no interest in taxing Crypto. In other words, the Vietnamese government is silent when it comes to taxing Crypto.
On the other hand, the government prevents financial institutions from handling Crypto. This lack of crypto taxes is one of the reasons why crypto adoption in Vietnam is high.
Crypto is a hedge against inflation
Throughout history, the Vietnamese preferred using other national currencies after experiencing economic turmoil and hyperinflation. Over the past couple of years, Vietnamese have accumulated assets to hedge against inflation.
That means crypto adoption in Vietnam will never see a fall as more people discover the convenience of digital assets.
Regulation needed
Despite massive crypto growth in Vietnam, extensive regulation is needed. However, this appears to be a long way to go. The Vietnamese government has to study the hits and misses of Crypto before it makes any necessary steps.
While preliminary approaches have been taken to regulate crypto use, including issuing warnings, a comprehensive framework needs to be developed.
The future of Vietnam’s crypto market
Currently, Vietnam ranks 10th in the global cryptocurrency acceptance index. This proves that the Vietnamese are very serious about crypto technology. Vietnam was in a bright spot in 2021, but this gap was widened after the fall of FTX.
Vietnam needs to take a cautious step toward cryptocurrency. Thankfully, the State Bank of Vietnam strives to steer regulation projects for digital assets. This implementation can help foster crypto development in the country in the future.
With the fall of FTX, this is an exciting opportunity for the government to regulate and legitimize the industry quickly. Otherwise, the country’s future will not be reliable and secure for investors.
Conclusion
Cryptocurrency is revolutionizing the banking industry. It allows users to send payments directly from one party to another without involving third-party processes.
Backed by an electronic payment system, it avoids inherent weaknesses. However, countries like Vietnam need a solution to take a higher step in developing considerable blockchain knowledge.