10 Facts About Regulations on Cryptocurrency Exchange in Vietnam

  Cryptocurrency has becoming a global phenomenon, but regulations on cryptocurrency exchange in Vietnam are still evolving. Unlike traditional currencies, issued by the State Bank of Vietnam (SBV), cryptocurrencies operate in a decentralized digital framework. However, the Vietnamese government has taken a strict stance on cryptocurrency in Vietnam, particularly regarding their exchange and use.

In the following, we will discuss 10 facts about the regulations on cryptocurrency exchange in Vietnam, exploring some understanding of the country’s legal environment for digital assets at the current time.

The reason we mention current time is because, this could change anytime because Vietnam government has put some thoughts to put this “digital assets” under regulations to manage the risks of money laundering and terrorist financing.

Cryptocurrencies Are Not Legal Tender in Vietnam

The most critical aspect of regulations on cryptocurrency exchange in Vietnam is that cryptocurrencies are not recognized as legal tender.

According to Vietnamese law, only the Vietnamese currency(VND) is considered the official currency.

The SBV has made it clear that Bitcoin and other cryptocurrencies cannot be used as a medium of exchange for goods and services.

As such, businesses and individuals are not allowed to accept cryptocurrency in exchange for products or services.

There was an incident which a university in Vietnam did announce a plan to accept tuition from foreign students studying in Vietnam in Bitcoin but such plan was withdrawn after receiving the opinion from the SBV.

Strict Ban on Cryptocurrency as a Payment Method

A key regulation on cryptocurrency exchange in Vietnam involves the complete prohibition of using cryptocurrency for payments.

At the moment, only licensed payment instruments are permitted. This explicitly excludes Bitcoin, Ethereum, and other cryptocurrencies from any form of payment activity. Individuals caught violating this regulation can face hefty fines.

Cryptocurrency Mining Is Not Banned, But Regulated

While regulations on cryptocurrency exchange in Vietnam are strict, cryptocurrency mining exists in a somewhat gray area.

Vietnam has not banned cryptocurrency mining, but certain limitations and reporting requirements exist for mining operations.

Imported mining equipment is subject to increased scrutiny, and customs authorities carefully monitor these imports to prevent illegal activities associated with cryptocurrency. There also also sub-license required making the import of mining equipments challenging.

No Clear Legal Framework for Cryptocurrency Exchanges

Vietnam currently does not have comprehensive legal framework governing these platforms.

Exchanges that operate in Vietnam do so in a gray area, as there is no official licensing process for them.

However, the government has warned investors of the risks associated with unregulated exchanges, as there is little protection in the event of fraud, hacks, or other malicious activity.

This regulatory gap has resulted in an increased risk for users of cryptocurrency exchanges in Vietnam.

Investors should be aware that they operate outside the protections afforded to traditional financial markets.

As the cryptocurrency market evolves, there are discussions about implementing clearer regulations on cryptocurrency exchange in Vietnam, but for now, the legal environment remains uncertain.

ICO (Initial Coin Offering) Activities Are Under Scrutiny

Another critical area of regulation on cryptocurrency exchange in Vietnam involves Initial Coin Offerings (ICOs).

ICOs are commonly used by blockchain startups to raise capital by issuing digital tokens.

However, the Vietnamese government views ICOs with caution, mainly due to the risk of fraud and financial scams.

To date, Vietnam has not yet issued specific regulations on ICOs, but the Ministry of Finance has proposed that they be closely monitored to protect investors from potential risks.

Cryptocurrency Trading Is Not Criminal, But Not Protected

Although it’s illegal to use cryptocurrency as a payment method, owning, trading, or holding cryptocurrency is not considered a criminal offense.

However, because cryptocurrency exchanges are unregulated, investors have limited legal protection.

The government has repeatedly issued warnings about the risks associated with cryptocurrency trading, highlighting the volatile nature of these digital assets and the absence of formal regulation on cryptocurrency exchange in Vietnam.

Individuals engaging in such activities should do so at their own risk, understanding that the current legal framework provides minimal safeguards.

Taxation on Cryptocurrency Earnings Is Unclear

Vietnam has not yet issued specific taxation laws concerning cryptocurrency earnings.

However, the General Department of Taxation has indicated that income from cryptocurrency trading and mining could potentially fall under the umbrella of capital gains taxes.

As cryptocurrency becomes more prevalent, the Ministry of Finance may develop clearer tax policies that include cryptocurrencies in their scope.

In the meantime, any earnings derived from cryptocurrency trading are considered taxable income, though enforcement remains a challenge due to the decentralized and often anonymous nature of these transactions.

Regulations on cryptocurrency exchange in Vietnam are expected to develop further in the area of taxation in the coming years.

Foreign Crypto Exchanges May Face Scrutiny

Currently, there is no licensing process for foreign exchanges to legally operate in Vietnam, and any platforms providing services to Vietnamese citizens without authorization are technically violating Vietnamese law.

That said, many foreign exchanges are still accessible to Vietnamese users through the internet, but individuals using these platforms are at their own risk, as these services are outside the jurisdiction of Vietnamese regulators.

This is a significant gap in regulations on cryptocurrency exchange in Vietnam, as it exposes users to unregulated platforms without any legal recourse in case of disputes or losses.

The Push for Digital Transformation Could Influence Future Regulations

Vietnam’s digital transformation strategy is ambitious, and cryptocurrency regulation could be influenced by this push toward a more digitized economy.

The Vietnamese government is keen on developing blockchain technology for various applications, including supply chain management, digital identities, and e-governance.

However, when it comes to digital currencies, Vietnam is cautious. The balance between promoting technological innovation and protecting its citizens from financial risks will likely shape the future of regulations on cryptocurrency exchange in Vietnam.

The government is expected to take a more proactive approach toward drafting regulations on cryptocurrency exchange in Vietnam, particularly as digital assets become more integral to the global economy.

Future of Cryptocurrency in Vietnam

The future of regulations on cryptocurrency exchange in Vietnam is uncertain, but change is on the horizon.

The government has established working groups to explore the potential of blockchain technology and digital currencies.

In addition, there is an ongoing discussion about launching a Vietnamese central bank digital currency (CBDC), which could revolutionize the country’s financial system.

The challenge will be creating regulations that encourage innovation while also protecting investors and maintaining financial stability.

About ANT Lawyers, a Law Firm in Vietnam

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers has lawyers in Ho Chi Minh city, Hanoi,  and Danang, and will help customers in doing business in Vietnam.

Source: https://antlawyers.vn/update/regulations-on-cryptocurrency-exchange-in-vietnam.html