Bitcoin in Vietnam: Why It Is Not Legal Tender

Bitcoin in Vietnam is not legal tender, and the State Bank of Vietnam says it cannot be used as a lawful way to pay. The bank made this clear in an official statement on February 27, 2014. We found no later statement from the bank that changes it. This note explains what the statement says and what risks the bank listed. It is not investment advice.

What the State Bank said

The State Bank of Vietnam (SBV) said that bitcoin and similar virtual currencies are not legal currencies. It said they cannot be used as lawful payment tools in Vietnam. The bank released the statement as interest in bitcoin investing grew in the country.

The SBV also told banks and other credit institutions that they may not use bitcoin or similar virtual currencies when they serve customers. News agencies reported this as a ban on banks handling bitcoin.

Sources: Vietnam Law & Legal Forum Magazine, "Digital currencies not recognized as legal tender in Vietnam" (July 24, 2014); Vietstock, "Viet Nam central bank says digital currencies not legit" (March 1, 2014); Business Standard / AFP, "Vietnam restricts use of Bitcoin" (February 28, 2014).

Why only the dong counts as money

The Vietnamese dong is the country's legal tender. Under Article 17 of the 2010 Law on the State Bank of Vietnam, the SBV is the only body that issues paper banknotes and coins. Bitcoin is not issued by the state or by any bank. It is created and passed around on computer networks with no government oversight.

Earlier, in January 2014, a senior SBV official had already said that bitcoin is not legal tender in Vietnam and must not be used as a means of payment. The official added that no legal framework exists for a virtual currency like bitcoin, so users carry high risks. The remark came after a Hanoi company began accepting bitcoin on its website.

Sources: Vietnam Law & Legal Forum Magazine (July 24, 2014); Vietstock, "SBV says bitcoin not accepted in Vietnam" (January 17, 2014).

The risks the bank listed

The SBV gave several reasons for its warning. Each is plain enough to check for yourself.

• No legal protection. The bank said bitcoin is not protected by law. Because of this, a dispute over a bitcoin deal cannot be settled by the proper authorities.
• Crime. The bank said bitcoin could become a tool for money laundering, drug dealing and tax evasion.
• Price swings and hacking. The bank said bitcoin is open to market swings and cyber attacks.
• No oversight. The bank told investors not to hold a currency that no domestic agency supervises and that many nations do not accept.

The central bank named a few of those nations in its warning, including France, Russia, China and Norway.

Sources: Vietnam Law & Legal Forum Magazine (July 24, 2014); Vietstock (March 1, 2014).

What the price record shows

Bitcoin's price has moved a lot. In 2013 it rose above US$1,000, according to the CoinDesk index cited by AFP. By late February 2014 it had slumped below US$600. VietnamNet reported that a bitcoin traded in Vietnam at about 6 million dong (about US$300) that week, down from about US$1,000 a month before.

The same week, Mt.Gox, the biggest bitcoin exchange, based in Japan, disappeared from the web and shook the bitcoin world, AFP reported.

Risk has not gone away. On July 18, 2017, CoinDesk ran headlines that digital currencies had bounced back above US$70 billion in total value after a rough stretch, and that US$7 million was lost in a hack of the CoinDash token sale. A reader who holds bitcoin should expect big moves and hacks again.

Sources: Business Standard / AFP (February 28, 2014); Vietstock (March 1, 2014); CoinDesk news headlines page as archived by the Internet Archive on July 18, 2017.

What this means for you

Three plain points follow from the bank's statement.

• Do not expect a shop or a bank to be required to take bitcoin. The state does not treat it as money.
• If a bitcoin deal goes wrong, the SBV said the authorities cannot settle the dispute. You carry the loss.
• Be careful with any offer that promises easy profit from bitcoin. The bank warned that the asset has no supervision and can swing hard.

If you plan to use bitcoin in any way, ask a Vietnamese lawyer about your own case first. Rules can change, and a lawyer can check the latest text.

Sources: Vietnam Law & Legal Forum Magazine (July 24, 2014); Business Standard / AFP (February 28, 2014).

Sources

• Vietnam Law & Legal Forum Magazine, "Digital currencies not recognized as legal tender in Vietnam," July 24, 2014.
• Vietstock (Vietnam News), "Viet Nam central bank says digital currencies not legit," March 1, 2014.
• Business Standard / AFP, "Vietnam restricts use of Bitcoin," February 28, 2014.
• Vietstock, "SBV says bitcoin not accepted in Vietnam," January 17, 2014.
• CoinDesk, news headlines page, archived July 18, 2017.