Experts warn Vietnamese investors of bitcoin bubble

Most people have rushed to the market due to its high profitability or generally for speculation. - Photo AFP/VNA

Speaking at the bitcoin and blockchain wave talk show held in Hà Nội on Wednesday, experts agreed that State management agencies should not restrain the market but cannot “ignore” this activity. The Government should quickly complete a legal corridor to deal with its negative impacts on the economy.

Nguyễn Duy Hưng, chairman of Sài Gòn Securities Inc (SSI), said bitcoin has been mentioned everywhere, not only in Việt Nam or the US. Statistics from brokerage firms show that the number of people opening bitcoin accounts has increased sharply alongside the four-fold increase in prices in just three months.

“Surging profits from investing in bitcoin has attracted speculators, but creates possible risks,” Hưng said, adding that the number of people wanting to invest in bitcoin is increasing continuously.

Blockchain is a disruptive technology that will fundamentally change banking as well as many other industries. Bitcoin is an electronic currency that uses blockchain to transfer funds from one party to another.

Dominik Weil from Bitcoin.vn said the Bitcoin Việt Nam Company was established four years ago and purchases bitcoin in the domestic market.

In terms of investment, bitcoin is similar to other investment tools as a form of new asset – investors buy low and sell high.

Most people have rushed to the market due to its high profitability or generally for speculation. They only want to buy and later sell it for higher prices, he said.

Trương Thanh Đức, chairman of BASICO Law Firm, said in theory, bitcoin could collapse overnight as it has no foundation to rely on.

Lawyer Đức said bitcoin is not money. There are no specific laws regulating bitcoin. It is not a payment tool, document or legal asset for payment.

Talking about the bitcoin trend in the future, Nguyễn Việt Bách from bitcoin.vn said prices would continue upwards over the next one or two years to reach even US$50,000-100,000 each.

“However, it could not continue to rise for the long term as there could be other cryptocurrencies attracting attention. Bitcoin itself could also be divided into different cryptocurrencies,” he said.

A legal framework

Trần Hữu Đức, a member of Fintech Vietnam Club’s management board, said it was hard to predict the market as it has been manipulated. Currently, there are many financial institutions joining the market, thus making its unpredictable. Bitcoin’s prices totally depend on the market.

Lawyer Trương Thanh Đức said speculation into bitcoin has encouraged development of blockchain technologies which have enormous potential.

Đức did not support the application of criminal law onto such speculation.

“People should be aware that investing into bitcoin is extremely adventurous. The Vietnamese laws do not officially allow bitcoin transaction floors at brokerage firms and financial institutions. Bitcoin is prohibited in payment activities,” he said.

Hưng from SSI agreed, saying that bitcoin has not been considered as money as it must be recognised by countries and have an exchange rate. Most people consider it a speculation product.

“The Government should have solutions to differentiate genuine investors from people taking advantage of the system to turn bitcoin into a multi-level marketing scheme or anonymous money transfer,” he said.

He also suggested having State management on activities to prevent possible risks, because if the bitcoin bubble bursts, it could adversely affect the economy.

This is also a financial trading activity which requires conditions. When foreseeing risks, the State should enhance its management. If the Government does not have a legal framework, it may not be able to protect people from possible fraud, he added.

Bitcoin and cryptocurrencies have been a hot topic among investors this year. The trend has sparked a fever worldwide, attracting thousands of new traders every day and pushing the market scale into hundreds of billions of US dollars.

Việt Nam is considered one of the most crowded bitcoin markets in the world.