If the bitcoin is recognised, it will minimise the influence of monetary policies and affect inflation and nominal GDP more.— File Photo

HA NOI (Biz Hub) — It's been a week since the Viet Nam real-time bitcoin exchange was launched, but the public is yet to see the authorities take action against crypto-currencies as they had promised.

The State Bank of Viet Nam (SBV) has consistently announced that bitcoins and other cryptocurrencies are not legal tender or permitted means of payment in Viet Nam.

Bui Quang Tien, Head of SBV's Payment Department that is supposed to manage electronic money, on July 12, vowed to work with the public security forces to seize operators of Viet Nam real-time bitcoin exchange (VBTC).

Despite the vocal warnings and the central bank's announcement explaining the fluctuating nature, complications and risks of virtual currencies, VBTC has 1,692 members and trading statistics are updated every day.

"The SBV needs to act. First, they have to define whether Bitcoin Viet Nam is legal," a representative of the High-Tech Crime Police (C50) told Thoi Bao Kinh Te Viet Nam (Viet Nam Economic Times).

The officer said that if the Bitcoin Viet Nam Co Ltd is illegal, the central bank has to issue a legal document regulating the application and punishment for the violation of laws.

"It should be enough if the law enforcement and security authorities start doing their jobs," the officer said.

Prior to the launch of the bitcoin exchange, the Government had ordered the SBV to review, study and draw up legal documents regulating virtual currency-related activities (including bitcoins). However, the central bank hasn't announced such a document yet.

VBTC CEO Nguyen Tran Bao Phuong said that the company's business licence was for computer and software work, so as to do business with bitcoins.

Phuong said that by nature, bitcoin was a software-based payment system with different versions, and added that it would be right to see the Bitcoin Viet Nam Co Ltd as an agent or a broker.

"We are waiting for the State to change their mind and allow us to register the bitcoin business, instead of us being forced to hide like we are doing now," Phuong told Thoi Bao Kinh Te Viet Nam, adding she was ready to cooperate with the Government to prevent bitcoin-related crimes.

VBTC was jointly founded by the Bitcoin Viet Nam Co Ltd and the Israeli Bitcoin Exchange Bit2C earlier this year. It launched beta testing in June and allows unlimited bitcoin purchases in Viet Nam.

"If Viet Nam approves bitcoins with the fully-functional setting of a recognised currency, besides the Vietnamese dong and other influential foreign currencies, it shall get more challenging for the SBV to manage monetary policy," said Nguyen Xuan Thanh, director of the Fullbright Economics Teaching Programme in HCM City.

Thanh described the bitcoin as a currency with deep-seated dollarisation which the Government has been struggling to deal with.

In fact, the payments work peer-to-peer without a central repository or single administrator.

Generally, the central bank uses Vietnamese dong to manage market liquidity, control inflation and bolster economic growth. If the bitcoin is recognised, it will minimise the influence of monetary policies and affect inflation and nominal GDP more.

At the beginning of 2014, the value of the bitcoin fell significantly when two of the biggest bitcoin exchanges in the world, Mt Gox and BitStamp, temporarily disallowed customers from withdrawing their money due to technical difficulties.

The US government also arrested four suspects for illegal activities connected to bitcoins. On February 25, Mt Gox closed down suddenly and hundreds of millions of dollars worth of bitcoins were stolen. — VNS