Vietnam PM (Prime Minister) Phạm Minh Chính is considering implementing cryptocurrency as a form of viable payment system for the country by asking the State Bank to study cryptocurrencies based on blockchain technology and prepare a pilot implementation by the 2021-23 timeframe.
Prime Minister Chính's Decision
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The ask that Prime Minister Chính makes is made out in his Decision No 942/QĐ-TTg that is subjected to the e-Government development strategy to work towards a digital Government. Having the Government become more digital means that development can happen at a much faster pace, the internet almost instant with all it can do, and so promote a better situation for Vietnam by allowing Government discussions to happen faster.
At the end of the document is the 'National Central Mission' of the Decision that outlines the aims of the Decision. There are two main decisions pointed within this section. The first one is to solve obstacles legally to a digital government through studying and changing to any relevant documents, including the Law on Electronic Transactions. The second is to have regulations on electronic archives to support the move of Vietnam into the digital world.
Crypto Study And Pilot Implementation
When someone thinks of a pilot, they would be thinking of a plane, standing ready for liftoff. Loaded with its equipment, it would wait for the signal to start, and when that signal happens, the plane is off. The result of the plane's journey will set up future planes, bigger and better, and so begin a continuous cycle of development. This likely also applies to the pilot implementation Prime Minister Chính is asking for, looking for ways to begin implementation of crypto to stay in the race of technology.
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Deputy head of the Finance Faculty for the University of Economics HCM (Ho Chi Minh) City Lê Đạt Chí stated that the study of crypto is needed to be accelerated to have an advantage over the race, which would be the race of technology mentioned earlier. Chí also refers to a survey researching central banks around the world. Such banks were found to have in three different stages with crypto. Either that they were piloting cryptocurrency use, thus beginning to use crypto, developing a plan for pilot implementation, or they were observing crypto, considering its opportunities and risks. The first group, piloting crypto, included 65-68 central banks, which is a considerable amount considering that central banks would play a significant role in society, controlling the flow of money. However, Chí points out that there are financial and monetary security risks involved, the most important one arguably the volatility of crypto, its price constantly moving.
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Deputy director of the Institute of Innovation for the University of Economics HCM City Huỳnh Phước Nghĩa indicates that now is the time for the Government to study and carry out the pilot implementation for crypto, which Prime Minister Chính has asked the State Bank to do. He states a major reason for such a move, going as follows:
Digital money is an inevitable trend
According to Nghĩa, the pilot implementation would help the Government discuss the implementation of crypto payment, finding out the positives and negatives of the pilot while working on an appropriate management mechanism that is likely targeted mitigating the risk of crypto. He also adds that the recognition of digital currencies by the central bank would allow the process to come at a faster pace, contributed by the increase of cashless payments within Vietnam.
Considering Crypto Options
Although a crypto study and pilot implementation are reported by Prime Minister Chính, it does not suggest any cryptocurrencies to use. Currently, Vietnam does not have a definite definition for cryptocurrency and virtual assets. The State Bank also stressed that crypto was not legally recognised in Vietnam with crypto payments going the same way, not protected within the country. It also asked credit institutions not to use crypto as a payment currency. In short, crypto was being pushed against. However, private investments into crypto were still acceptable.
Bitcoin (BTC) was outlawed on the 11th of April, 2018 for payments and such a ban may be turned over if the Government is thinking of implementing crypto into its system, BTC is the most popular option for crypto payments. Although the most popular, BTC does come with some issues, including its efficiency, working on the Proof of Work (PoW) system that consumes a high amount of processing power and electricity with liability to blockchain clots, and volatility, its price fluctuating overtime. The volatility of BTC would also apply to the majority of altcoins, especially since BTC can be considered as the main influence for the market's trends. Alternatives for BTC are possible options for Vietnam, including Bitcoin Cash (BCH) which is more targeted towards payments, as suggested by its name.
Crypto stablecoins can be used for Vietnam with the stability associated. Vietnam's native currency, Vietnamese đồng, can be translated over into the crypto world with a stablecoin formed of it, similar to having Tether (USDT) being a US dollar stablecoin. However, the problem that may arise with such a stablecoin is powering the transactions, Vietnam not highly technologically advanced with possibilities of clogs within the system, more catastrophic than those in the BTC blockchain. Vietnam can develop its technology to meet such an idea with its demand, pushing both its financial and technological system at the same time to push the economy.
Further Reading
CoinTelegraph - Report: Vietnam's PM asks State Bank to trial digital currency on blockchain - https://cointelegraph.com/news/report-vietnam-s-pm-asks-state-bank-to-trial-digital-currency-on-blockchain
Decrypt - Vietnam’s Central Bank To Pilot Use of Crypto - https://decrypt.co/75208/vietnams-central-bank-to-pilot-use-of-crypto
Việt Nam News - PM asks central bank to study cryptocurrency, carry out pilot implementation - https://vietnamnews.vn/economy/984753/pm-asks-central-bank-to-study-cryptocurrency-carry-out-pilot-implementation.html
LuatVietnam - Quyết định 942/QĐ-TTg Chiến lược phát triển Chính phủ điện tử 2021-2025 (Decision 942/QD-TTg e-Government development strategy 2021-2025) - https://luatvietnam.vn/hanh-chinh/quyet-dinh-942-qd-ttg-chien-luoc-phat-trien-chinh-phu-dien-tu-2021-2025-203675-d1.html
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