Vietnam flies high on cryptocurrency gains

June 24, 2021 | 10:00
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The booming popularity of cryptocurrency has triggered criticism across the globe, particularly in Vietnam. However, both investors and regulators have shown keen interest in a potential central bank digital currency.
Vietnam ranked 13th in Bitcoin investment gains at $351 million in 2020. Cryptocurrency is gaining popularity over the past few years. Source: Chainalysis

Statistics compiled by cryptocurrency data provider Chainalysis ranked Vietnam 13th in Bitcoin investment gains at $351 million in 2020. The country outweighed several larger and more developed economies such as Australia, Saudi Arabia, and Belgium. To boot, Vietnam has high levels of grassroots cryptocurrency adoption, ranking tenth overall on Chainalysis’ Global Crypto Adoption Index.

“Upon further inspection, what stands out the most is the number of countries that appear to be punching above their weight in Bitcoin investment as compared to their rankings in traditional economic metrics. Vietnam can perfectly epitomise the situation,” the data analysis noted.

Elsewhere, according to a recent survey in March by Statista, 21 per cent of around 1,000-4,000 respondents in Vietnam said they had used or owned cryptocurrencies in 2020.

While Vietnam has seen extraordinary economic growth over the last two decades, significantly reducing its poverty rate from over 70 per cent to below 6 per cent since 2002, the country ranks 53rd in GDP at $262 billion and is categorised as a lower-middle income country by the World Bank, according to Chainalysis.

Meanwhile, US investors are the greatest beneficiaries, collectively making over $4 billion in realised Bitcoin gains in 2020 – three times as much as the next highest country, China.

The surging appetite for bitcoin and other types of cryptocurrencies is undeniable, illustrated by their skyrocketing price over year within one year. As of July 3, 2021, Bitcoin price reached nearly $34,000, compared to around $9,000 in the same day last year.

Several central banks across the globe have aired intentions to trial central bank digital currencies (CBDC) trials, including the Bank of Korea (BoK) and Bank of Japan (BoJ).

BOK and BOJ's experiments to study the feasibility of issuing their own digital CBDC would pave the way for South Korean and Japanese companies, including those operating in Vietnam, to implement digital currencies. Regulators believe CBDC could "modernise their financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments," according to Reuters.

Regional asset owners are still wary of volatile cryptocurrencies, but they say central bank-backed digital currencies could become investment-friendly over the next five to 10 years, according to Financial Times.

The BoJ in April confirmed it would test the technical feasibility of the core functions and features required for CBDCs as a payment instrument, including issuance, distribution, and redemption. Similarly, the BoK said on May 24 that it would start a 10-month test of the digital won in August with a budget of around $4.45 million.

Most recently, El Salvador became the very first country in the world to adopt bitcoin as legal tender at the beginning of June, a move that delighted the currency’s supporters.

Prof. Dr. Andreas Stoffers, country director, Vietnam, The Friedrich Naumann Foundation for Freedom, told VIR, “According to the classical definition, money has three features: it is a means of payment, a store of value, and a unit of account. Cryptocurrencies can serve all three functions. Whether the future belongs to the current cryptocurrencies or whether new means of payment based on blockchain technology will win the race is still uncertain.”

On June 30, Vietnam's Prime Minister Pham Minh Chinh signed Decision No.942/QD-TTg approving the country's e-government development strategy in the period of 2021-2025 with a vision to 2030.

Particularly, the PM assigned the State Bank of Vietnam (SBV) to thoroughly research and build a cryptocurrency development and management mechanism based on blockchain technology during 2021-2023 for piloting.

For Vietnamese investors keen to embrace the unique opportunities offered by cryptocurrencies, online multi-asset broker Exness offers trading in Bitcoin, Bitcoin Cash, Litecoin, Ethereum and Ripple, under some of the market’s best trading conditions. The global broker is a well known and respected brand in Vietnam, offering their mobile trading app in Vietnamese as well as a dedicated Vietnamese customer support team. Furthermore, Exness works with local payment providers such as Ngangluong, to facilitate payments and reduce costs for local traders. A globally regulated broker, Exness is highly trusted and currently has a global client base of over 200,000 traders.

By Celine Luu

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