Vietnamese central bank imposes ban on cryptocurrency

The State Bank of Vietnam – the country’s central bank – has stated that the use of cryptocurrencies is illegal, and users could face heavy fines.

The bank has issued new monetary law, following demands of a review by Nyugen Xuan Phuc, the Prime Minister of Vietnam. Previously, there had been hopes that the Prime Minister was considering draft legislation to legally recognise cryptocurrencies this year, and introduce tax guidelines for cryptocurrency users by mid-2019.

Cryptocurrencies such as Bitcoin – the original and most prominent cryptocurrency – are decentralised digital currencies. Computationally expensive cryptographic problems are solved by miners around the world to approve transactions and add them to a public ledger. This lack of central regulation, while attractive to many users, has attracted criticism for potentially allowing criminals to launder money and evade taxation without consequences.

While Bitcoin is legal in the EU and many other parts of the world, some governments have taken steps to ban cryptocurrencies outright, including China, South Korea, Russia and Bangladesh (where its use can lead to a jail term under money laundering laws). Only last week, the governor of the Bank of Indonesia, Agus Martowardojo announced that Bitcoin is not a recognised currency and that its users “will be dealt with”.

Now, Vietnam has laid down stringent rules explicitly banning the use of cryptocurrencies. The only authorised payments in Vietnam are those issued or controlled by the State Bank: cash, cheques, debit and credit cards and payment orders. This means that cryptocurrencies are illegal payment instruments.

“Bitcoin and other virtual currencies are not lawful means of payment in Vietnam. The issuance, supply, use of bitcoin and other similar virtual currencies as a means of payment is prohibited in Vietnam,” a statement by the bank said.

From the first quarter of 2018, anybody caught using, issuing or buying a cryptocurrency or other illegal means of payment could suffer a fine of VND150-200 million (~$9,000). The bank has not made any reference to cryptocurrency exchanges hosted in the country or cryptocurrency mining - namely, the use of computational power to crack mathematical challenges in order to approve cryptocurrency transactions.

According to CoinDesk, Bitcoin has just reached a record high, now being worth more than $6,300 per coin. In spite of a spate of cryptocurrency bans, particularly in East Asia, Peter Thiel, the billionaire investor and founder of PayPal, commented recently that Bitcoin has been “underestimated” and has great potential.

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