Cryptocurrencies in Vietnam

The cryptocurrency market in Vietnam remained bleak in 2023, with nearly 65% of investors experiencing a lack of profitability. Among them, a significant 43.6% of investors have suffered losses, according to the Vietnam Crypto Market Report 2023 by Coin98 Insights. However, Vietnam is still ranked second among 74 countries surveyed in terms of the percentage of respondents who said they used or owned cryptocurrencies.

Same time Vietnam has no specific regulation neither for crypto nor for cryptocurrency exchanges and the country has been added by the Financial Action Task Force (FATF) in the «grey» list and is making efforts to exit it. Same as some time ago in the UAE, one of the issues that has revealed FATF is the lack of regulation in crypto. UAE implemented proper crypto regulation and exited FATF «grey» list on February, 24, 2024. Vietnam should do its best also.

Governmental Proposals to Regulate Cryptocurrencies

The Vietnamese government has taken steps to address the growing interest in cryptocurrencies. In 2021, the government issued Decision No. 942/QD-TTg, which approved the strategy of the development of e-government for 2021-2025 with an orientation toward 2030. This decision raised a stir among Vietnamese investors, as it seemed to hint at the government's growing openness toward cryptocurrencies, which had been largely opposed to date.

Furthermore, in March 2021, Vietnam's Ministry of Finance announced the establishment of a research group on virtual assets and virtual currency, with the aim of achieving an appropriate policy and management mechanism for them. Unfortunately, nothing has been done in a practical way and in 2023 Vietnam was put in a FATF «grey» list.

Virtual Asset Service Providers (VASPs)

Vietnam lacks significant regulatory frameworks governing the use of cryptocurrencies, including for trading. As a result, over 70% of Vietnamese investors favor some form of regulatory oversight, with 33.4% supporting regulations for large centralized exchanges and 24.6% advocating for broader regulations that encompass exchanges, crypto companies, and individual investors.

The most popular crypto exchanges among Vietnamese investors include both domestic and international platforms, such as Binance, Coinbase, and local exchanges like BitcoinVN.

By present time, regulations on virtual assets, including VASPs, are being developed in Vietnam to align with anti-money laundering and terrorism financing efforts.

Bitcoin Mining

The legality of bitcoin mining in Vietnam is a complex issue. While there is no explicit legal definition of cryptocurrency, the government has taken a relatively clear stance against its use as a currency or means of payment. In 2017, the State Bank of Vietnam (SBV) explicitly stated that cryptocurrency, including Bitcoin and Litecoin, is not a legal means of payment, and any issuance, supply, or use of them as currency or a means of payment is prohibited and subject to administrative or even criminal sanctions.

Despite the government's opposition, the popularity of bitcoin mining in Vietnam has been growing. Vietnamese users have been drawn to cryptocurrencies for various reasons, including accessing banking services that would otherwise be inaccessible, investing and speculating, and transferring funds. The country's burgeoning tech talent and high crypto adoption rates have also made it an attractive destination for foreign projects seeking to tap into the region's growing market.

Taxation

The tax regulations surrounding cryptocurrencies in Vietnam are still evolving. Currently, there is no specific legal framework for the taxation of cryptocurrency-related activities. However, the government has indicated that it is working on developing appropriate policies and management mechanisms for virtual assets and virtual currencies, which may include tax regulations.

In conclusion, the cryptocurrency landscape in Vietnam is in a state of flux, with the government grappling with the challenges and opportunities presented by this emerging technology. As the country continues to navigate this evolving landscape, it will be crucial for policymakers to strike a balance between fostering innovation and ensuring appropriate regulatory frameworks to protect investors and the broader financial system.