State Bank of Vietnam Carries Out Pilot Run For Crypto Use

The State Bank of Vietnam was recently issued an order by Vietnamese Prime Minister Pham Minh Chinh to study and carry out pilot implementation of cryptocurrency based on blockchain technology, with terms dated for the 2021-2023 period.

The implementation was delineated in the Prime Minister’s Decision No. 942/QD-TTg regarding an e-Government development strategy positioning Vietnam into a “digital government.”

Vietnam is positioning to develop and master blockchain and cryptocurrencies as part of a broader strategy to harness the power of core technologies to propel the country’s economy forward.

The Prime Minister’s Decision No. 942 also outlined plans for leveraging artificial intelligence (AI), big data, augmented reality and virtual reality (AR/VR), sectors which are expected to take flight and create disruptions that would form favorable conditions for launching the government’s digital transformation initiatives.

To date, there are no specific regulatory definitions for either cryptocurrencies or digital assets in Vietnams. Despite this, the State Bank of Vietnam has in the past issued reminders to its jurisdiction that cryptocurrencies like Bitcoin and other digital assets were not legally recognized in Vietnam, to the extent that the use of crypto as a mode of payment was also not recognized or legally protected in the state.

In line with this ongoing development, the State Bank of Vietnam has asked credit institutions within its jurisdiction to disallow or discourage the use of cryptocurrencies as a payment method or even as currency for their services. Despite the issuance of Decision No. 942, the Vietnamese central bank has yet to grant license to any crypto firms in the country.

Vietnam’s Ministry of Finance, meanwhile, has set up a working group that would engage in research into digital assets and cryptocurrencies, in line with a previous order from the Prime Minister (Decision No 664/QD-BTC, April 24, 2020). The research is aimed at formulating and proposing regulatory policies and management mechanisms for digital assets and cryptocurrencies, as well as how these would intersect with Vietnam’s digital transformation across various sectors.

“Digital money is an inevitable trend.” says  Huynh Phuoc Nghia, Deputy Director at the Institute of Innovation under the University of Economics, Ho Chi Minh City.

Nghia believes that it is now a critical time for the Vietnamese government to study and carry out pilot implementation for cryptocurrency. Such an implementation would help the government identify both positive and negative aspects of the crypto and blockchain space which may prove beneficial to its strategies for digital transformation.

Nghia also suggests that while cashless payments have been gaining traction in Vietnam, a formal recognition of digital currencies as well cryptocurrencies by the central bank would help accelerate the process of adoption.

The pilot implementation would help the government find positive and negative aspects, if any, while developing a more appropriate management mechanism, Nghia said, adding that while cashless payments were increasing in Vietnam, the recognition of digital currencies by the central bank would help accelerate this process.

According to Le Dat Chi, deputy head of the University of Economic’s Finance Faculty, research into cryptocurrencies was necessary to provide Vietname with an advantage in what is now a global race to adapt to new core technologies such as blockchain.

Chi also cited a survey which showed that between 65-68 central banks across the world were now piloting cryptocurrency use, while another group of central banks has started to develop plans for pilot implementation. Vietnam previously belonged to the third group, which is involved with just observation, and is now moving into the second group with the planned pilot implementation of cryptocurrency use.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.