The crypto industry has been advancing rapidly in every way, from technological development to prices, adoption rates, and more. There are new major trends emerging every year, with IEOs dominating 2019, DeFi exploding in 2020, and now NFTs enticing people in 2021.
Institutional investors are coming to the industry all over the world, mostly through 3rd party companies, but that doesn’t change the fact that they are bringing money to crypto and locking coins like Bitcoin and Ethereum away. Meanwhile, for around two years now, central banks around the world have been studying cryptos and researching the possibility of CBDCs — central bank digital currencies. Many are even testing the already developed coins right now.
While a bit late to the party, it appears that Vietnam is about to be the next to jump on the CBDC train, at least, according to a recent report from the country.
Vietnam’s State Bank to Start Researching CBDCs
According to a recent report published by the daily Viet Nam News, the country’s Prime Minister, Pham Minh Chinh, recently instructed the State Bank to start the study of CBDCs, and even to conduct a pilot for the country’s native digital currency.
However, unlike other countries that are all using bespoke centralized protocols, the PM requested that Vietnam’s CBDC pilot be built on existing blockchain technology. The new initiative seems to be the latest effort of the country’s Prime Minister’s wider e-government development strategy.
With such a late start, the State Bank is expected to work on the local CBDC between 2021 and 2023. Of course, it remains unknown whether the coin will even be launched once the development and testing end.
The move is still a very positive one, and it further shows that the country’s politicians are still very much open to blockchain technologies. Of course, this excitement and fascination with blockchain did not transfer to cryptocurrencies, themselves, despite the fact that they are the blockchain’s oldest and primary product.
Vietnam and Cryptocurrencies
Vietnam has had a harsh relationship with crypto over the last few years. As some may remember, the country fully banned Bitcoin as a means of payment back in 2018, similarly to countries like China, Russia, and a number of others. People and companies were still allowed to invest in crypto, own it, and even trade it for profit. However, they could not be used as a means of payment.
After this initial move, the situation worsened fairly quickly, and a new directive arrived. The directive targeted credit institutions, instructing them to restrict any services tied to cryptocurrency-related activities. The goal was to prevent potential money laundering.
However, despite the moves, there were never any regulations or guidelines concerning cryptocurrency exchanges. After a rough initial reaction, the situation started to change slightly in 2020. Last year in May, the country’s Ministry of Finance decided to create a research group that would study cryptocurrency and proposes policy changes for them.
The group included a variety of entities, including the country’s securities watchdog, the central bank, the Department of Banking and Financial Institutions, the General Department of Vietnam Customs, and more.
Meanwhile, the country continued to see a rise in cashless payments, and it is believed that the recognition of cryptos by the State Bank would be helpful in speeding up this process even further. The deputy director of the Institute of Innovation at the University of Economics Ho Chi Minh City, Huỳnh Phước Nghĩa, said that the switch to digital money is inevitable. This has been something that many have claimed around the world, insisting that it might take some time, but that the world will eventually completely abandon physical money.
So, with that being the accepted fact, the government will be able to easily assess the advantages and flaws of different approaches to digital money by conducting a pilot of its own. Of course, the country will have to act as quickly as possible in order to be competitive, especially as the CBDCs already have a massive momentum around the globe.