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Banking & Finance

Plan to legalize crypto-currencies

Released at: 07:35, 27/08/2017

Plan to legalize crypto-currencies

Illustrative image (Source: tiendientu.com)

Legal framework to be drafted by August 2018.

by Duy Anh

Vietnam is preparing to legalize Bitcoin and other crypto-currencies under a new plan approved by the Prime Minister, who has asked the Minister of Justice to coordinate with other senior advisors, including those from the State Bank of Vietnam (SBV) and the Ministry of Finance, to draft a framework for crypto-currency legalization by August next year.

The Prime Minister also directed advisors to assess the best way to tax crypto-currencies and penalize violations of subsequent regulations. These tasks are to be completed by June and September of 2019, respectively.

The plan follows a 2016 report that said the country would consider taking a more open stance on crypto-currencies and other disruptive financial technologies. As Bitcoin has resulted in many civil disputes, commercial disputes, and criminal acts, the government believes virtual currencies need to be managed and supervised.

The move towards legalizing Bitcoin represents a change of heart from the government. As early as 2014, the central bank stated that crypto-currencies were not a valid form of payment or settlement, warning organizations and individuals to not hold, invest in, or execute any transactions involving Bitcoin or similar virtual currencies, as it presents risks and they are neither lawfully recognized nor protected.

The government issued repeated warnings about Bitcoin in the years that followed, although it did not prohibit its citizens from using crypto-currencies.

Earlier this year, however, the SBV created a FinTech steering committee to promote the development of Vietnamese financial technology startups.

Many people anticipate Bitcoin will flourish in Vietnam. As one of the world’s fastest-growing economies, many of its citizens now have access to smartphones but have never utilized traditional banking services. Vietnam is examining an increase in investment and businesses transactions with digital money, the scale of which is undoubtedly escalating.

Vietnam joins several other countries that have recently begun to consider legalizing Bitcoin. Earlier this month, the National Bank of Ukraine announced it would develop a legal framework for Bitcoin regulation, while the Philippines has recently approved the registration of two Bitcoin exchanges. India, however, continues to dissuade its citizens from using crypto-currencies, even as local exchanges have seen demand surge this year.

There are two virtual currency exchanges that began in Vietnam in 2014: the Ho Chi Minh City-based VBTC Vietnam Ltd, which operates an exchange that trades Bitcoin for local currency, and the Bitcoin Vietnam Company. Both have been scrutinized by local authorities and police, though their operations have not been impeded.

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