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Viet Nam–Japanese University
Viet Nam National University

The risks for Bitcoin users and suggestions for
Bitcoin management policies in Vietnam


: Vu Hoang Dung

Student ID

: 17110077


: Master of Public Policy

Word count

: words

Hanoi, January 2018

Nêu cả khung lý thuyết (trích dẫn sách, nguồn, tài liệu tham khảo…..)
Nêu bối cảnh, lý do chọn vấn đề này (cụ thể, không cần quá rộng…)
Nêu các phương án
- (nếu không chấp nhận bitcoin thì là bước thụt lùi công nghệ, thất thoát ngoại tệ, ảnh
hưởng đến vai trò của ngân hàng nhà nước, khó quản lý, ….)
- Nếu chấp nhận: kênh đầu tư, hội nhập toàn cầu về công nghệ, giảm chi phí quản lý trung
gian, nhà nước kiểm soát được tài sản thông qua công nghệ blockchain…)
Xem lại quy trình, lý thuyết trong tài liệu
Liên hệ vs cách giải quyết của Nhật Bản (no one fit all): hiện tại ở Việt Nam mới chỉ có giải
pháp (solutions chứ chưa có một chính sách cụ thể cho Bitcoin)
Chính sách: giải quyết vấn đề + động lực
Khi nào thành 1 vấn đề chính sách:
- Nghiêm trọng, ảnh hưởng đến cộng đồng ở quy mô lớn (phạm vi + thời gian)
- Mối quan tâm rộng rãi (gây được sự quan tâm của nhiều đối tượng)
- Nghiêm trọng xung đột, đi ngược pháp luật hiện tại

Policymaker, identification, policy transfer, actor, adaptation, advocacy coalition
framework, applications outside the US, applications and revisions, belief systems and
power, case studies, description of, flow diagram, policy entrepreneour



1. Introduction

According to an October 30th statement1, the State Bank of Vietnam (SBV) said that Bitcoin
is not a "lawful means of payment" in the country, and the "issuance, supply, use of Bitcoin
and other similar virtual currency as a means of payment is prohibited". From 2018, illegal
use of Bitcoin in payments will be subject to penalties of between 150 million ($6,600) and
200 million ($8,800) Vietnamese dong (VND). The central bank states: "As from January 1,
2018, the act of issuing, providing and using illegal means of payment (including Bitcoin
and other similar virtual currency) may be subject to prosecution." 2
The reason for the policy is to protect the interests of the state bank in issuing money and
regulating monetary policy. In addition, it also prevents money laundering, delinquency,
and social harm. As can be seen, this is a temporary policy issued by the central bank to
limit the rapid development of Bitcoin in the recently. However, the delay of the SBV on the
regulatory status may prove to be damaging. Bitcoin has gained wide acceptance around
the world, so this industry would need to be regulated in Vietnam.
Bitcoin users in Vietnam included Vietnam-traders, exchanges, and merchants who accept
payments in Bitcoins have grown rapidly. In this situation, they will face a number of risks
in using Bitcoin such as legitimacy, price fluctuations, trust, security, and consumer
protection. This paper will shortly introduce about Bitcoin, further analyze the risks that
Bitcoin users may encounter, thereby providing some policy implications in the current
Vietnamese context. These policies not only will benefit and protect Bitcoin users but also
help to promote the development of Bitcoin “innovation clusters” in Vietnam.

• Bitcoin

Bitcoin is a virtual currency introduced in 2008 by a person or group calling “Satoshi
Nakamoto”. It’s an open peer-to-peer cryptographical system which allows online payment
to be sent directly without an intermediary. Transactions happen through a public ledger
called blockchain, handling users’ data anonymously. Eight years since its introduction,
Bitcoin becomes the most widely used and accepted thedigital currency. Now, Bitcoin is
considered as the financial products associated with technology.
• Bitcoin pricing
Since pricing in Bitcoin transactions is demand based, Bitcoin pricing is dependent on the
trading i.e. demand and supply factors. More the demand, higher is the price. Until late
2015, the price remained US$ 300, and around December 2017, the price rose to over US$
20,000. Following the similar trend, the price of Bitcoin in Vietnam crypto-market has
recently gained remarkably in recent months.

1 https://www.coindesk.com/vietnams-central-bank-announces-ban-on-Bitcoin-payments/
2 https://thuvienphapluat.vn/van-ban/Tien-te-Ngan-hang/Nghi-dinh-96-2014-ND-CP-xu-phat-vi-pham-hanhchinh-linh-vuc-tien-te-va-ngan-hang-254293.aspx



Chart 1: The price of Bitcoin

Source: http://www.coindesk.com/price/

Bitcoin in circulation
Since 2009 till January 2018, the number of Bitcoins in circulation has only increased, the
figure has reached to 16,802,587 in number.3
Market capitalization of Bitcoin
The market capitalization of Bitcoin as on 15 January 2018 has been computed to come up
at US$ 226,476,054,493, while the maximum supply in the market is limited to 21,000,000
BTC as of now.
Table 1: Market Capitalisation of Bitcoin

Source: https://coinmarketcap.com/currencies/Bitcoin/ dated 15th January 2018
• Bitcoin exchanges4

A Bitcoin exchange is a business platform that facilitates the exchange of Bitcoins for
another currency such as VND or USD. Thereby allowing the users to trade and make
profit. Bitcoins exchange quickly in the market, as more and more people started
exchanging Bitcoins, mostly for speculative purposes. With the high volatility and a
market without any regulatory intervention, people find it suitable to invest, hold, trade
and make profits out of the same.
3 : https://coinmarketcap.com/currencies/Bitcoin/
4 Vallari Dubey & Team, Vinod Kothari Consuntants, Bitcoin India Report 2017, 2017.



Bitcoins are not backed any particular asset or security, because of which its value is not
driven by any factor but demand and supply in the market.
• Business model

Bitcoins exchanges quickly spread into the market. At a preliminary level, the exchange is
simply a common platform to the users for the purpose of buying and selling while
matching mutual needs, in order to earn profits.
Take an idea of a stock exchange, a Bitcoin exchange works by providing service to its
users. In the case of Bitcoin, there is no party involvement, the service is provided by the
exchanges which thereby charges commission for the trade conducted and earns
• Service provided by Bitcoin exchanges in Vietnam

In Vietnam, Bitcoin is not accepted as a payment, but there are some services for Bitcoin
users that are common in the market:
- Storing Bitcoin in a Bitcoin wallet after deposit and receipt.
- Exchange of Bitcoin with other currency
- Some service used to pay to merchants in Bitcoin and acceptance by them thereon.
- Sending Bitcoins stored in the wallet to another wallet.
- Mobile applications providing ease of accessing Bitcoin information.
• Regulatory status of Bitcoins Wordwide

Picture 1

Source: http://www.coindesk.com/Bitcoin-legal-map/
From the picture above, countries in the light green are those where have permitted the use
and trade of Bitcoin explicitly. Vietnam is one of the countries in yellow are considered as


contentious markets for Bitcoin. Besides that, marked in red have declared Bitcoin to be
hostile or illegal.

Countries that have legalized Bitcoin
Table 2: Legal status of Bitcoin in some countries have legalized.


Legal status


In the process of legally recognizing as money5


Proposed in budget speech 2017-18 to treat Bitcoins as money6

European Union

Convertible decentralized virtual currency7


Digital currency8


Digital currency9

United States

“funds” under 18 U.S.Code 1960 (virtual currency in general)10


Virtual currency (monetary surrogate)11


Virtual commodity12


Risks for Bitcoin users in Vietnam

Firstly, this part presents an SWOT (strengths, weaknesses, opportunities, and threats)
analysis on Bitcoin which is summarized in table 3.
In this table, we can see that Bitcoin have many advantages. They eliminate transaction
costs, safer than cash, harder to forge than other forms of currency. Additionally, all
payments are final and irreversible, preventing fraudulent transactions. Bitcoin technologies
are brand new and currently developing, so legitimizing the currency will promote
innovation in the industry and catalyse the creation of new financial instruments and
services based on the currency. This will create new jobs and spur the development of
expert and knowledge based in Vietnam.

5 http://www.fsa.go.jp/news/28/ginkou/20170324-1.html
6 http://www.budget.gov.au/2017-18/content/glossies/factsheets/html/FS_innovation.htm
7 http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf
8 https://www.canada.ca/en/revenue-agency/news/newsroom/fact-sheets/fact-sheets-2015/what-you-shouldknow-about-digital-currency.html
9 http://www.bi.go.id/en/ruang-media/siaran-pers/Pages/SP_160614.aspx
10 https://cdn.arstechnica.net/wp-content/uploads/2016/09/murgio-order.pdf
11 http://npaed.ru/images/downloads/translation_letter_from_the%20Federal_Tax_Service.pdf
12 http://beijing.pbc.gov.cn/beijing/132005/3230072/index.html



Aside from strengths and opportunities, Bitcoin has weaknesses that create doubt in its
target users’ minds. Bitcoin’s openness has provided Bitcoin with potential opportunities and
anonymity is a double-edged sword, both creating threats, and opportunities.
Table. 3. Bitcoin an SWOT analysis13

In my opinion, the potential of Bitcoin outweigh the threats. However, Bitcoin users also
need to know more detailed about the risks that can happen, especially when Vietnam has
no legal framework for managing and using Bitcoin. It is not accidental that many financial
experts oppose Bitcoin, many countries banned Bitcoin, some countries accept Bitcoin but
are extremely cautious. At the moment, we do not know what is going to happen to Bitcoin,
the bubble may break and a financial crisis will spread throughout the system. Meanwhile,
Vietnam will also be affected because nowadays, according to Similarweb.com, Vietnam's
traffic on some Bitcoin exchanges is always in the top five along with countries like the US,
Russia and Japan.
• Legitimacy

In Vietnam, Bitcoin is being considered legitimate, but it needs to be apperception that it is
commonly used by law-abiding parties to transact business. Unfortunately, Bitcoin has a
history with illegal activities, such as black market (Wannacry virut 14) and money laundering.
On July 21, 1977, the SBV sent official letter 5747NNNN-PC 15 to the government office to
respond to the issue of virtual currency. SBV does not accept virtual money as a means of
payment. Previously, the State Bank of Vietnam (SBV) has presented the Government with

13 Sahar Mirzayi, Mohammad Mehrzad, Bitcoin, An SWOT Analysis, 2017
14 The WannaCry ransomware attack was a May 2017 worldwide cyberattack by the WannaCry ransomware
cryptoworm, which targeted computers running the Microsoft Windows operating system by encrypting data
and demanding ransom payments in the Bitcoin cryptocurrency.
15 https://thuvienphapluat.vn/cong-van/Tien-te-Ngan-hang/Cong-van-5747-NHNN-PC-2017-tra-loi-kien-nghive-thiet-ke-trung-tam-may-tinh-Bitcoin-Litecoin-368960.aspx



Decree No. 80/2016 / ND-CP16 amending and supplementing some articles of Decree No.
101/2014 / ND-CP on non-cash payment.
We also realize that the government has not made a significant ruling on Bitcoin to argue
that the currency cannot be trusted, and could even become illegal in the future. This lack of
clear regulation also means that many Bitcoin users exist in a legal gray area, this makes
investing in Bitcoin even riskier, and limit the growth of blockchain technology which related
on the Bitcoin industry.

Bitcoin price fluctuates dramatically and depends substantially on public sentiment. These
large upswings and downswings have caused many economists to questions the viability of
digital currency. In December 2018, Bitcoin prices in Vietnam peaked at over $ 20,000, and
only a week later hit bottom at $ 10,000, which could cause huge losses for investors.
Currently, users of fiat money trust the stability of the authorizing country. Bitcoin’s
decentralized nature means that is faces volatility without stabilizing institutions in place.
Therefore, the risks of owning and trading Bitcoin raise barriers to mass adoption.
• Trust

While volatility and lacks of legitimacy certainly undermine public trust in Bitcoin, we can
realize that Bitcoin is a new and emerging technology based on complex cryptographic
protocol. In addition, Bitcoins are not regulated by a centralized agency till date, make them
less reliable. To invest in Bitcoin, users must place significant faith in the cryptographic
security, trust any third parties involved, such as wallet services or exchange. Therefore, the
central obstacle to Bitcoin’s widespread adoption is social trust.
Recently, when the profit from virtual currency investment is growing some companies have
raised capital in the form of ICO (Initial Coin Offering), using virtual money to deceive
investors, causing economic losses as well as negative impact to Bitcoin in Vietnam.
• Security of Bitcoin wallet

Vietnam government works hard to prevent fraud, forgery, and scams, but can’t do much
about stolen wallet on a street. Bitcoin security also has the problems. It specifically pointed
out, that since they are stored digitally, Bitcoin wallet can be hacked, attacked
Bitcoin is a safe protocol, but the Internet is an unsafe place. If security standards are
applied to the Bitcoin wallet, exchanges, and market, it could become the safest way to
transact money online. Unfortunately, Bitcoin exchange and marketplace technology is still
in its infancy, and security is subpar.

16 http://vbpl.vn/nganhangnhanuoc/Pages/vbpq-van-ban-goc.aspx?ItemID=111655
17 Puneet Kumar Kaushal, Dr. Amandeep Bagga, Dr. Rajeev Sobti , Evolution of Bitcoin and Security Risk in
Bitcoin Wallets, 2017



In Vietnam, some Bitcoin-related sites have been hacked, and thousands of Bitcoins have
been stolen from sites and services such as Bitcoinica, and Bitfloor.
• Consumer protection

Vietnam government maintains an interest in protecting Bitcoin users. Even if Bitcoins were
recognized and regulated by the government, Bitcoin’s decentralized and irreversible nature
presents many challenges to consumer protection.
Many of the Bitcoin companies and Bitcoin institutions are established, they have a higher
risk of abruptly shutting down or being hacked. Similarly, if Vietnam government seizes
Bitcoins from a marketplace, there is no assurance money will be returned.
Finally, there is no forum, where users can possibly reach out for any help or grievance, as a
result of which Vietnam’s consumer are being exposed to informative risks.
4. Legal status of Bitcoin in Vietnam and Policy recommendation

According to the scheme, in Vietnam, the Prime Minister assigned the Ministry of Justice to
take the main responsibility and coordinate with the State Bank, the Ministry of Information
and Communications, the Ministry of Public Security, the Ministry of Industry and Trade, the
Ministry of Finance ... to review the current legal framework. Then, the Ministry of Justice
assessed comprehensively the current situation in order to propose the Government to
resolve as well as amend the law on electronic money accordingly.
The report assessing the current situation to revise the legal framework needs to be
completed before August 2015 and by the end of 2018 must develop legal documents on
virtual property. At the same time, to June 201919, it was necessary to complete the
proposal for a legal framework on taxes on virtual property. In addition, recommendations
for the prevention and treatment of violations related to Bitcoin were also completed by the
Government by September 2016.
These regulations represent a very cautious view of the government on the Bitcoin issue. At
present, although Bitcoin is banned, ownership, creation or exchange Bitcoin as other goods
is not regulated. So, it can be seen that, in the era of technology 4.0, Vietnam still create a
chance to develop blockchain platform which built up Bitcoin.
After reviewing and synthesized a number of documents, this paper will make some
suggestions on the policy for protecting Bitcoin users and managing of Bitcoin in Vietnam.
• Recognize Bitcoin and Bitcoin Advocates & Stakeholders

Define Bitcoin in the Law18. First, Vietnam government should define Bitcoin more carefully.
At present, Vietnam government do not have any official opinions exist explaining Bitcoin’s
status in the law. We also need issue a clear and unified set of policies and regulations
regarding Bitcoin and other decentralized cryptocurrencies. In its opinion, State Bank also
defined certain classes of Bitcoin users as being analogous to money service business, like
18 T. Alcom, A. Eagle, E. Sherbondy, Legitimizing Bitcoin: Policy Recommendation, 2017




Visa or MasterCard. Additionally, we need released a paper that certain types of transactions
involving virtual currencies may be taxable, this makes Bitcoin community have more
responsible for their using and investing. Finally, we need to develop thought, nimble and
sensible policies that protect the public without stifling innovation and economic growth.
Involve Bitcoin Stakeholders. To avoid overly strong and broad regulation of the Bitcoin
market, law-makers must ensure that they involve a variety of Bitcoin stakeholders in the
regulatory process, so that their vision and needs can be fairly balanced with government
interests. The government should work closely with Bitcoin businesses, users, miners and
advocates when creating and enforcing law.
Regulate Bitcoin Market and businesses





Push states to clarify money service business Licensing Laws. The government should clarify
their legislation surrounding licensing requirements for entities which purchase virtual
currencies. To prevent money laundering activities, I urge that companies which engage in
Bitcoin purchases be required to register with Ministry of Finance and maintain records of
their transaction histories.
Consumer Protection in Online Wallet Service. Companies which maintain online wallets for
Bitcoin users operate within a legal grey zone under law. In this case, the value is being
stored on the severs of company in the form of text files. If a user’s wallet becomes
compromised, its contents are lost or stolen, the companies would be the ones issuing
refunds to users whose wallets are compromised, not the government.
Clarifying Tax code. Taxation is the question surrounding Bitcoin. Bitcoin have the dual
properties of a highly-liquid instrument like cash in one’s local currency and an exchange
instrument such as foreign currency or even stock. Moreover, a user has the capability to
generate new Bitcoins through mining, which makes it completely unlike any existing
financial instruments. According this, I propose three guidelines for taxing Bitcoin:
+ Capital gains tax should be levied when users exchange VND for Bitcoins or vice versa.
+ Sales tax should be levied when companies offer goods or service in exchange for Bitcoins,
calculated using value of the transaction in VND.
+ Bitcoin miners should not be taxed.
Combatting illegal Markets: Money laundering and illegal trade in Bitcoin is one of the
reasons why Vietnam government did not accept Bitcoin. However, regarding business
which accepts Bitcoins, I suggest that the government treat the currency as cash to all
intents and purposes. The government should combat illegal markets by targeting unlawful
business, rather than consumers. By working with technology experts and developing
algorithms to analyze the ledger, the government could spot illegal activities in Bitcoin more
effectively than they can in cash.

Vietnam Bitcoin reserve

I recommend that Vietnam government help to stabilize the currency by maintaining a
reserve of Bitcoins. They could buy and sell to moderate supply and demand, smoothing out
dramatic shifts in the market. The government can also help to ensure that the Bitcoin
network remains honest by providing computational power to honest nodes in the network.


Lessons learned from other countries.

- Vietnam need to learn and consider the mode of issuance, operation mechanism, impact
factors, modes, methods, and behavior. This experience is extremely important to the
government. For example, in Korea, to avoid speculation, the Korean government is rushing
to establish rules related to Bitcoin as limit the amount of investment, as well as the age
limit for investors.
- Bitcoin can be considered as money in a specific community but only in this community. If
Bitcoin moves from a community to the whole society and the country, it should be strictly
managed. Even in countries with modern facilities and good management like Japan, the
shift from investment to real money has to go through strict regulatory authorities, which
are only recognized in some jurisdictions like few areas of investment.
- Since virtual currency can be a scam to the community, we need to guide the population,
equipped with knowledge or even ban capital raising activities with virtual currency as in
- In some developed countries, Machine Learning, Artificial Intelligence, and blockchain
technology are the subjects of general education.
5. Conclusion

Bitcoin users need to understand Bitcoin’s weaknesses and need to understand how this
digital currency is originated and gets its value. Bitcoin has already demonstrated a great
deal of promise as a technology capable of reshaping how we view and use money. The
insufficient knowledge of economy and crypto may make people destroy economy made up
of digital currency. The purpose of bitcoin is to create a currency through public ledger
without the need of the third party and to establish a trust through peer to peer
collaboration. Bitcoin is just the beginning of new technologies based on the blockchain
platform, which will impact all areas of finance, banking, healthcare and education and so
on. Blockchain is an inevitable trend in the world, helping to significantly reduce transaction
costs, secure data sharing and being included in university training programs.
With steady growth in digital currency, a parallel economy is developing and it is the time
when Vietnam government should step in and put regulations into it. Decentralized virtual
currencies should be acknowledged, Bitcoin stakeholders should be brought into the
decision-making process. Putting regulations may help states to impose taxes and prevent
black money to sustain in the system. Countries like China, India, Iceland, Sweden, Thailand,
and Bolivia have banned the use of Bitcoin. However, people from these countries are
making use of Bitcoin as the government does not have control over it. Japan recognizes
Bitcoin as a currency and has a positive viewpoint towards it. Any currency must not be
treated as illegal if it not at par with government money. It would be wrong to say that the
system of digital currency has evolved perfectly as it still lacks the potential to build a good
economy which even fiat currency is also not able to do in the history at time of global



Future work in Bitcoin involves those aspects that can manage instant boom and burst in the
economy stability depends upon the centralized taxation system by government. Perhaps
this digital currency system currently does not get any close to that. It would be interesting
to see how society and states will grow up without any central power as economy strength
of any state is hooked on the currency.

T. Alcom, A. Eagle, E. Sherbondy, Legitimizing Bitcoin: Policy Recommendation, 2017.
Vallari Dubey & Team, Vinod Kothari Consuntants, Bitcoin India Report 2017, 2017.
Sahar Mirzayi, Mohammad Mehrzad, Bitcoin, An SWOT Analysis, 2017.
Puneet Kumar Kaushal, Dr. Amandeep Bagga, Dr. Rajeev Sobti , Evolution of Bitcoin
and Security Risk in Bitcoin Wallets, 2017.
5. S.Nakamoto, Bitcoin: A peer-to-peer Electronic Cash System, 2008.
6. Bitcoin Foundation, Our mission, 2013.
7. Bitcoin Charts Market, Nov. 2013.
8. Coinbase Security, Nov.2013.
9. https://coinmarketcap.com/currencies/Bitcoin/
10. http://www.coindesk.com/Bitcoin-legal-map/
11. http://www.fsa.go.jp/news/28/ginkou/20170324-1.html
12. http://www.budget.gov.au/201718/content/glossies/factsheets/html/FS_innovation.htm
13. http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf
14. https://www.canada.ca/en/revenue-agency/news/newsroom/fact-sheets/factsheets-2015/what-you-should-know-about-digital-currency.html
15. http://www.bi.go.id/en/ruang-media/siaran-pers/Pages/SP_160614.aspx
16. https://cdn.arstechnica.net/wp-content/uploads/2016/09/murgio-order.pdf
17. http://npaed.ru/images/downloads/translation_letter_from_the
18. http://beijing.pbc.gov.cn/beijing/132005/3230072/index.html
19. http://vbpl.vn/nganhangnhanuoc/Pages/vbpq-van-ban-goc.aspx?ItemID=111655
20. https://thuvienphapluat.vn/cong-van/Tien-te-Ngan-hang/Cong-van-5747-NHNN-PC2017-tra-loi-kien-nghi-ve-thiet-ke-trung-tam-may-tinh-Bitcoin-Litecoin-368960.aspx



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