The government of Vietnam has taken steps to accelerate the adoption of cryptocurrency regulation that will affect Bitcoin. The executive power in Hanoi has insisted that the framework should be ready by the end of January. Amendments to the tax code are expected to help tap into proceeds from “virtual property and digital money”.
Indochina Catching Up
The new impetus was given by a high-ranking government official who insisted on hastening the legal process. Deputy Prime Minister Vuong Dinh Hue has asked the Ministry of Justice and the State Bank to quickly complete the legal framework and report to the government. According to Vietnamese media, the documents should be presented to the Council of ministers by the end of the month.
The central bank of Vietnam shall assume prime responsibility for proposing amendments to the taxation laws. Respective supplements related to cryptocurrencies should be promulgated soon after the introduction of the regulatory regime. It is not yet clear whether the new legislation will define Bitcoin and its alternatives as investment assets, means of payment, or both. The exact tax rates and their scope in regards to income and profit from trading and mining are still to be defined.
With its indentations to speed up the process of “managing Bitcoin”, Vietnam is trying to catch up with China and South Korea, which recently moved in the same direction. But the Vietnamese authorities now have a chance to do a better job. They can take into account certain mistakes made by their Asian neighbors who are tightening the loophole.
Stalemate in the Status Quo
In Vietnam, and elsewhere on the Asian continent, cryptocurrencies drew significant attention in the past year, despite warnings by some experts and officials about the risks stemming from their volatile character in the absence of comprehensive legal guidance. The disruptive nature of “virtual money”, as cryptos are referred to by many in power, has divided opinions around the world about how to “manage” the phenomenon while taking advantage of it. Officials have been wondering how to sheer off some of their value worth more than $800 billion now…Or stop them in their tracks, if they prove too damaging to the status quo.
That’s a dilemma that Vietnamese officials are also facing and scratching their heads over. At a National Assembly hearing in November, the Governor of the State Bank of Vietnam Le Minh Hung said that under current Vietnamese regulations, bitcoin was not legal tender or a “permitted means of payment”, as the bizhub edition of Việt Nam News reported. According to the central bank, the issuance and use of Bitcoin and other cryptocurrencies for payment purposes was prohibited. However, Hung added that “from the perspective of treating it as an investment asset”, the SBV would co-operate with the justice ministry to “study the legal framework for managing” Bitcoin.
A project to develop this framework, “with an aim to protect legal rights of investors”, was approved by the government back in August. The Việt Nam News article also reads that the nature of cryptocurrencies must be clarified and the country “must learn from international experiences” – in order to minimize risks, while “ensuring flexibility and promoting innovation”. But then:
It is increasingly clear to this reporter that the only rational way out will be to negotiate, not as victors, but as an honorable people…
Rush Part of Broader Move
Whether Vietnamese authorities are losing their “Cronkites” or local media is simply relaying the mood in the corridors of power in Hanoi is hard to tell. It is important to note, though, that the rush towards cryptocurrency regulation is part of a broader move to implement changes in the “economic management” of several sectors. Ministries and other branches of the executive structure have been assigned duties and responsibilities to “quickly finalize and propose plans” to do that.
Beside the legal framework for managing Bitcoin, the finance ministry has been urged to complete a project on expanding the tax base of the non-state sector. And the Ministry of Planning and Investment was asked to provide a statistical overview of the whole Vietnamese economy. So, if Bitcoin is not singled out and put up against the wall, maybe peace is on the way in Vietnam.
Do you think Vietnam will employ a more positive approach towards Bitcoin regulation? Share your thoughts in the comments section below.
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