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Virtual currency develops complicatedly, the Government has warned people to understand risk and be careful

08:11 | 03/07/2018

VCN - Answering questions of National Assembly deputies in the fifth session of the 14th National Assembly, Deputy Prime Minister Vuong Dinh Hue said that the Government has instructed ministries and sectors to implement many solutions to help people understand and be careful of virtual currency.

virtual currency develops complicatedly the government has warned people to understand risk and be careful Over 9,300 automatic data processing machines for exploiting online virtual currency were imported
virtual currency develops complicatedly the government has warned people to understand risk and be careful Nearly 2,500 Bitcoin and Litecoin diggers were imported from China
virtual currency develops complicatedly the government has warned people to understand risk and be careful Potential risks from the import of Bitcoin diggers
virtual currency develops complicatedly the government has warned people to understand risk and be careful
Bitcoins and cryptocurrencies are inherent in a kind of financial speculativeasset / tool. Photo: Internet

Virtual currency situation is quite complex

National Assembly Deputy Huynh Thanh Chung, National Assembly delegation of Binh Phuoc province has raised some questions on virtual currency. In response to this, Deputy Prime Minister Vuong Dinh Hue said that in the past, Bitcoin and similar cryptocurrencies (virtual currency) operates scatteredly, anonymously and are not controlled and issued by State agencies. Vietnam as well as most other countries do not consider virtual currency as the legal currency and legal means of payment in their territories.

However, virtual currency is a big and new phenomenon and problem. Specific legal regulations on virtual currency and virtual property in Vietnam is not available. The situation is complicated.

According to statistics, there are over 1,500 different types of virtual currency in circulation worldwide. The capitalization of virtual currencies was up to US$ 300 billion in mid-June, 2018, in which Bitcoin accounted for more than 40% of total capitalization (according to CoinMarrketCap.Com).

In Vietnam, virtual currency transactions in late 2017 and early 2018 have been complicated, attracted many individuals interested in buying and selling virtual currency trading, most notably Bitcoin. Virtual currency transactions are mainly buying and re-selling on the virtual currency exchange outside of Vietnam’s terriorities, from volume of Bitcoin / other cryptocurrencies (Ethereum, LiteCoin, etc.) acquired by trading or "digging" (exploiting) of virtual currencies based on imported specialized computer systems with advanced configuration

According to Cryptocompare company, by the end of November 2017, 80% of Bitcoin transactions were originated from Asia, including the four largest markets being China, Japan, Korea and Vietnam. The number of visitors from Vietnam to some Bitcoin trading exchanges or virtual currency websites in the world such as Bittrex, Poloniex, Coinmarketcap ... is always in the Top 5 together with the United States, Russia and Japan.

In addition, the amount of Bitcoin diggers imported into Vietnam in recent years has also increased quite high. According to the Customs, from 2017 up to now, more than 15,600 virtual currency diggers were imported into Vietnam, while representative from Ho Chi Minh City Customs Department said that from the beginning of 2018 to now, the Department has carried out import procedures for 3,664 automatic data processing machines forvirtual currency exploitation.

Therefore, in Official Letter No. 5484 / VPCP-KTTH dated 9th June 2018, the Government assigned the Ministry of Industry and Trade to assume the prime responsibility for, and coordinate with the Ministry of Finance and concerned agencies to study, and suspend the imports of automatic data processing machines according to the competence and current law provisions.

Help people understand the risks

According to the Deputy Prime Minister, the risks involved in virtual currency investment and trading can beexpressedas having two aspects, risks associated with the stability of the financial market and risks to social stability and order.

Therefore, over time, the Government has issued guidance,and ministries,sectors and localities have actively implemented a number of tasks and measures to help people understand the risks andhave cautioned vigilancewithvirtual currency investment and trading, preventing the negative effects of virtual currency.

Specifically, due to early awareness of the risks and consequences of Bitcoin and other similar virtual currencies, the State Bank of Vietnam (SBV) has consistently affirmed that Bitcoin and other similar virtual currencies are not a legal means of payment in Vietnam. The issuance, supply, use of Bitcoin and other similar virtual currencies as a means of payment are prohibited in Vietnam.

On 21st August 2017, the Prime Minister issued Decision No. 1255 / QD-TTg approving the scheme of completion of the legal framework on management of virtual assets, digital currencies and virtual currencies(Scheme1255), in which assigning the Ministry of Justice to be the focal point for reviewing and assessing the virtual currency situation and making proposals for the development of legal documents on management of virtual currencies and virtual properties.The completion time is in 2018.

Facing the complicated developments, risks, and unexpected and negative consequences of virtual currencies for the Vietnamese market, on 11th April 2018, the Prime Minister issued Directive No.10 / CT-TTg on strengthening the management of activities related to Bitcoin and other similar virtual currencies, which has assigned specific tasks to relevant ministries and departments to prevent and control virtual currency transactions and activities, to minimize negative impacts of virtual money on people and society.

On the basis of synthesizing and assessing the actual situation in the country and referring to practical experience and international practices, the SBV has already developed a report on reviewing and proposing amendments, supplements and promulgation of new legal documents on digital currency, which clarifies the concept, nature and expression of digital currency, the object of management as well as proposing appropriate solutions to manage the operation, supply, issuance and use of digital currencies (it is expected to submit to the Government in August 2015).

Regarding the proposal of Mr. Huynh Thanh Chung to consider the issuance of virtual currency payment tool in the future, the Deputy Prime Minister confirmed that up to the present time,virtual currency has not become a currency and means of payment, but it is likely to challenge the national currency and the current payment network.

This is because, the acceptance of virtual currency as a safe and effective exchange mediator at the moment is very low. Virtual currency transactions are mainly buying and reselling for the purpose of investment, speculation and not for use as a means of exchange and payment of goods and services. Internationally, virtual currency is only accepted on the dark websites and in a small number of units that provide goods and services as a image marketing tool.

Another limitation of Bitcoin in particular and other virtual currencies are the strongmarketfluctuations,which is unlike the regular stabilized features of national currencies. Finally, Bitcoin and cryptocurrencies also failed in the role of a unit of account when a few companies and organizations made accounting, accounting reports, financial reports in Bitcoin or cryptocurrencies.

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With above characteristics, Bitcoin and cryptocurrencies are inherently the nature of a financial tool/ asset, it cannot yet assume the role and function of a true payment means. In addition, although countries have not yet agreed on the views, treatment and management mechanisms for virtual currency, no country / region in the world recognizes Bitcoin or similar cryptocurrenciesas legal tender, guaranteed by the Government, the Central Bank and protected by the legal system.

The proposal of deputies for a digital currency to be issued and guaranteed by a competent state agency is a very new issue that requires knowledge and speciality. Some large international financial institutions are also cautious with this proposal. Therefore, in the coming time, the Government and the Vietnamese authorities will continue to study and update the situation related to this new proposed content.

By Huong Diu/ Huyen Trang