Vietnam's Central Bank Announces Ban on Bitcoin Payments

Vietnam's central bank is prohibiting the use of bitcoin and other cryptocurrencies in payments.

According to an Oct. 30 statement, the State Bank of Vietnam said that cryptocurrencies are not a "lawful means of payment" in the country, and the "issuance, supply, use of bitcoin and other similar virtual currency as a means of payment is prohibited."

From next year, it goes on, illegal use of cryptocurrencies in payments will be subject to penalties of between 150 million ($6,600) and 200 million ($8,800) Vietnamese dong (VND).

The central bank states:

"As from January 1, 2018, the act of issuing, providing and using illegal means of payment (including bitcoin and other similar virtual currency) may be subject to prosecution."

The moves comes as part of a new legal framework for cryptocurrencies instigated by Vietnam's Prime Minister Nguyen Xuan Phuc. That process has now been completed and the framework submitted to the government, the State Bank indicates.

Local reports suggest that the ban may already be having an impact on local institutions.

News source VietnamPlus said that FTP University in Hanoi, which recently announced it would allow students to pay for tuition in bitcoin, could now be forced to reverse that decision. Representatives of the State Bank reportedly stated that, if the university continued to treat bitcoin as a "legal means of payment," it would be "committing an act of violation under the current law provisions, and may subject the university to the appropriate sanction."

The move by the central bank is likely to come as a shock to many in the domestic cryptocurrency space. When the prime minister requested the framework to be drawn up in August, there were hopes the country might formally recognize bitcoin as a form of payment next year.

However, the country has previously issued warnings about bitcoin and blocked credit institutions from offering digital currency services.

State Bank image via Shutterstock