Vietnamese Watchdog Orders Banks To Stop Dealing With Crypto

Vietnam has become the latest country to crackdown on the cryptocurrency industry after the financial regulator ordered banks and financial firms to stop dealing with Bitcoin and other cryptocurrencies.

The State Securities Commission of Vietnam (SSC) has issued a cautionary warning to all financial establishments in the country asking them to refrain from processing any transactions related to the crypto industry. The SSC also emphasized that all financial firms must fully comply with anti-money laundering (AML) regulations.

The directive from the SSC does not come as a surprise as Prime Minister Nguyen Xuan Phuc had issued a warning in Jan 2018 calling for better accountability and standards regarding cryptocurrencies. Vietnam follows in the footsteps of China and India in putting a stop to cryptocurrency trading.

While the SSC did not use the word ‘ban’ in its cautionary warning, media outlets have stated that the warning is more or less a blanket ban on cryptocurrency trading in Vietnam. A number of financial institutions in Vietnam including crypto exchanges, securities investment funds, public companies, crypto traders and fund management firms will be impacted by the new ban on cryptocurrencies.

Crypto Ban Was Not Unexpected

Vietnam cracking down on the crypto industry was expected as the government and financial watchdog provided a number of signals that they were cracking down on the digital currency. The State Bank of Vietnam (SBV) issued a warning in April preventing all commercial banks, intermediaries and payment service provides from processing any crypto related transaction.

One of the main reasons for this stance given by the SBV was due to the risks cryptocurrencies caused to the market. There were concerns that cryptocurrencies would increase money laundering activities, trade fraud, terrorism financing and evasion of taxes by leveraging crypto markets. The SBV also refused to recognized cryptocurrencies as fiat money and would not accept it as a lawful method of payment in the country.

The Ministry of Industry and Trade, the SBV and the Ministry of Finance decided in June to ban the import of all crypto mining equipment. The latest ban from the SSC is the final nail in the coffin for the cryptocurrency industry in Vietnam.

Vietnam will need to come up with a strong set of regulations to oversee the crypto industry, should it ever decide to lift the ban. As of now, there is no indication that the Vietnamese government has plans to regulate the cryptocurrency industry.