The Vietnamese government is working toward building and introducing a comprehensive legal framework surrounding virtual currencies like bitcoin, a report has revealed.
As a country that has seen its fair share of mainstream pyramid schemes misusing bitcoin – leading to regulators and authorities warn against the use of the digital currency – Vietnam is working toward enforcing legal frameworks for virtual currencies and properties, choosing to regulate the innovation rather than ban it.
According to a report in regional publication VnEconomy, the Vietnamese government has begun a project working toward a complete review of digital currencies, ultimately leading to “a comprehensive legal framework for virtual property, electronic money and virtual currency in Vietnam,” the report reads.
In delegating responsibilities, the Vietnamese government has tasked a number of governmental agencies to review the practice of virtual currencies and property in the country. Due in December 2017, the review will see the collaborative effort of the State Bank, the Ministry of Justice, the Ministry of Information and Communications, the Ministry of Industry and Trade, among other ministries, coming together to help provide the framework.
The regulatory approach will borrow from the efforts taken by other governments and authorities around the world, including the likes of Japan, the United States and the European Union. Japan has notably passed a legislative bill to regulate bitcoin exchange in the country this year. While the United States sees laws differ across states, New York’s BitLicense is a notable example of an existing legal framework in the country.
While bitcoin isn’t officially recognized in Vietnam, there is a need to do just that by bringing virtual money into legal frameworks according to the Ministry of Justice. Noting bitcoin’s market value at over $10 billion – the market cap at the time of publishing is $12.15 billion – the Ministry of Justice points to civil litigations and crime as reasons for bitcoin transactions to fall under the purview of its supervision.
The Vietnamese government’s sweeping effort to study, understand and then regulate bitcoin transactions in the country will also ultimately lead to tax collections from transactions or profits made from the cryptocurrency, according to the report. If dodged, the government will also bring in criminal sanctions for tax violations and is geared to introduce these regulations in 2018.
The endeavor to regulate bitcoin comes during a time when Vietnam is flourishing as one of the fastest-growing economies in the world. A falling poverty line and increasing smartphone adoption sees the masses, including those unbanked, enabled with previously unavailable access to technology.
Unfortunately, however, the advances have also made it easier for illegal money schemes to operate using digital currencies like bitcoin. Some examples include an MLM-based investment scheme involving bitcoin as its currency going bust after accumulating deposits of over $1.1 million. A separate pyramid scheme netted over $100,000, resulting in the Vietnamese government warn against using the cryptocurrency.
Still, the move toward regulation is a notable departure from the government’s earlier stance, wherein a Vietnamese regulator warned consumers and investors against using virtual currencies with an outright public call.
South Korea is also engaging in a similar effort, studying other countries’ regulatory approach to digital currencies as it address the surging trend of bitcoin adoption in the country. Bitcoin exchanges and businesses in South Korea could soon see regulation in 2017.
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