On August 21, Vietnamese Prime Minister Nguyễn Xuân Phúc signed a plan outlining the legalization of digital assets and cryptocurrencies in Vietnam by August of next year. So far, the plan includes vague measures for legalization and fitting regulations, but more specific actions have yet to be drafted.
The first order of business is to evaluate what the legal status of these kinds of assets is already, a task that will be undertaken by the Vietnamese Ministry of Justice and the State Bank of Vietnam. Because digital assets are something that the Vietnamese government has no pre-existing legal structure for, both the Ministry of Justice and the State Bank will be reviewing the steps that other countries have taken to put their own regulations on cryptocurrency.
Following legal recognition, taxation is likely to be the next step in Vietnam’s adoption of cryptocurrency. This, along with IT security requirements, and measures to prevent blackmarket usage of cryptocurrency.
Looking into the Past for a Glimpse of the Future: A Big Boost is Likely
Vietnamese crypto users aren’t the only ones excited about this news; seasoned members of the crypto community know that in this case, “what’s good for one is good for all”. That is, there is a positive correlation between the more “mainstream” cryptocurrency becomes and its general value.
Ethereum’s rise to the moon in May/June of this year was one in a series of shots heard ‘round the world that brought many newcomers into the world of cryptocurrency, and brought cryptocurrency a little closer into mainstream fintech. The boom can largely be attributed to the fact that Japan legalized cryptocurrency in May.
Before legalization, cryptocurrency was still used in Japan, but in a sort of back-alley way that made mainstream companies wary of using it. “Normally, regulation is not a good thing,” said Quoine CEO Mike Kayamori in May. However, putting regulations on cryptocurrency actually has the effect of broadening its appeal to a wider range of users, including–notably–corporations and other well-established institutions.
When Japan legalized cryptocurrency, Bitcoin and Ethereum were the only two to make the cut. After the regulations were put in place, BTC and ETH were not declared to be forms of legal tender. Rather, they were to be accepted as legal forms of payment. Both could be bought and sold tax-free.
Additionally, the regulations legalised BTC and ETH exchanges–but not without stipulations. The conditions, which were intended to protect users, had a hugely positive effect on crypto usage in Japan. Japanese exchanges must comply with obligatory governmental registration, a fixed amount of starting capital, a secure IT system to prevent hacking and theft, and yearly auditing by a CPA.
Japan was the first country to sign such strict regulations into law. Regulations are underway in the United States, but on a state-by-state basis. It will be some time before those processes are completed.
Vietnam is the Latest, India Already on the Way
Although Vietnam is the new kid on the block, other countries who have been watching the crypto world have seen the risks and benefits associated with cryptocurrency, and have decided to get in on the action. A regulatory plan for cryptocurrency usage is currently making its way through the Indian government.
Cryptocurrencies may be of particular interest to the governments of developing countries because of the possibilities that they hold to empower people who live in underbanked regions. Investment in cryptocurrency provides people in areas with sparse economic infrastructure with the ability to invest and transact electronically, something that regular banking systems have not been able to manage.
Indeed, there has been an uptick in crypto usage in the poorer regions of Thailand, India, and Tanzania; small, but remarkable nonetheless.
This could be true for Vietnam as well, and if everything goes according to plan, there will be many benefits for people on both sides of the coin–crypto investors outside of Vietnam will see a boost in the value of their coins, and Vietnamese people of all social strata will have a new avenue to invest and transact. The future looks bright.