Bitcoin Turns Digital Gold In Vietnam Essay Example

cautioned against the use of bitcoin and other virtual currencies, advising individuals and organizations to avoid holding, investing in, or transacting with them. The central bank stressed in an email that these virtual currencies are unsafe and lack legal recognition or asset protection.

China and Thailand have both imposed restrictions on bitcoin transactions, with China banning such transactions by financial institutions and Thailand placing regulations on the conversion of bitcoin to other currencies. Additionally, the Monetary Authority of Singapore plans to introduce rules requiring virtual currency exchange facilitators to verify customers' identities and report any suspicious transactions to the police.

Bitcoin is emerging as a new menace to the Vietnamese currency, the dong. In Vietnam, it is traditional to give dollars and gold as wedding gifts and utilize them for significant transactions like buying a house.

Beginning in 2011, the government initiated actions to decrease the level of dollarization in the economy. The central bank instructed lenders to lower interest rates on deposits made in dollars and aimed to suppress the underground market for the American dollar. Although certain Vietnamese landlords still insist on receiving rent payments for upscale apartments in dollars, it is not allowed to price goods and services in the United States currency.

The government is highly wary of new financial instruments that may jeopardize macro-economic stability, as it has already faced situations where banks and credit cooperatives have failed, leading to runs. Fred Burke, the managing director of Baker & McKenzie (Vietnam) Ltd. in Ho Chi Minh City, describes this cautious attitude as "very suspicious".

"The power of the state can be undermined by virtual currencies," Burke stated in a phone interview on

July 23rd. Bitcoin Vietnam Co.'s worldwide exchange has experienced a growth in users, reaching over 1,800 since its establishment in March. These users have conducted approximately 150 bitcoin trades, equivalent to $86,200 in value, according to Weil. VBTC, the domestic exchange operated by the same startup, has around 300 users and has facilitated the trading of two bitcoins thus far."

According to Weil, the bourses in Ho Chi Minh City, which are located in a home within a narrow alley where neighbors also sell vegetables and raise chickens, have been under scrutiny by local authorities and the police. However, these operations have not been disrupted.

Government's Message: "They are expressing discontent with it," Weil stated. "They have not prohibited it. Some individuals are optimistic that this bitcoin concept will eventually disappear."

Nonetheless, the government's anti-bitcoin initiative is discouraging certain businesses. Quang Hung, co-owner of a Hanoi cafe that used to accept bitcoin until April, disclosed in a phone interview on July 24 that they no longer welcome digital currency.

According to the Thoi Bao Ngan Hang newspaper's report on July 23, Major General Nguyen Hung Linh from the Ministry of Public Security mentioned that Vietnam lacks regulations concerning the utilization of bitcoin and other virtual currencies.

The report cited him saying that the government will need a transitional period to formulate strategies and responses for digital currency.

Despite receiving both phone calls and a hand-delivered letter requesting comment, officials at the department failed to provide a response.

The dong, Vietnam's currency, experienced a 1 percent devaluation on June 19, which was the first devaluation in a year. Eugenia Fabon Victorino of Australia & New Zealand Banking Group Ltd., an economics analyst, predicts

that the central bank will further weaken the currency by the end of this year.

The dong, or Bitcoin, has experienced a 0.6 percent decline this year, reaching 21,230 VND per dollar. In contrast, currencies of Indonesia, Malaysia, Thailand, the Philippines, and Singapore have appreciated. This data has been compiled by Bloomberg.

Dwindling confidence in the Vietnamese currency, the dong, combined with the increasing prevalence of smartphones and e-commerce, will contribute to the acceptance of bitcoin in Vietnam, states Kien, the founder of a parenting website. Currently, he has received one payment of 0.03 bitcoin.

In a recent interview, Le Thao, the founder of a Hanoi-based startup specialized in developing software for virtual-currency touchscreen kiosks, expressed his belief in the significant potential of Bitcoin in Vietnam. According to Thao, Bitcoin is a force that cannot be stopped globally and thus Vietnam has no other option but to recognize and accept it.