Mr. Truong Van Phuoc: 'Vietnam should ban the buying and selling of Bitcoin'

The Acting Chairman of the National Financial Supervisory Commission stated that Bitcoin is not currency because it is not issued by a central bank.

- The price of Bitcoin has skyrocketed this year, then plummeted very quickly in the last few trading sessions. Perhaps no other currency or commodity has experienced such a dramatic rise and fall of thousands of dollars. What are your views on Bitcoin?

- I believe Bitcoin is not currency. Traditional currency, in my opinion, must be issued by a central bank and must strictly adhere to binding conditions, for example, how the issuance of that currency creates a money supply that matches the circulation of goods and money, as well as the effects of inflation and other macroeconomic variables (interest rates, exchange rates, etc.).

Mr. Truong Van Phuoc, Acting Chairman of the National Financial Supervision Committee, believes that Bitcoin belongs in a place that cannot be controlled. Photo: Anh Tu.

Every commodity is subject to the laws of supply, demand, and price. There is currently significant speculative demand for Bitcoin; that's an undeniable reality. That's the demand, but what about the supply? What mechanisms, organizations, or individuals are creating that supply?

As far as I know, Bitcoin is created through a mining process, which is extremely complex and requires algorithms and open-source software. This shows how rapidly the world's scientific and technological revolution has developed, but given the realities of Vietnam's economy and society, I fear that very few people can access the deep origins of that supply. This creates an enormous risk because we only have one demand: Bitcoin speculation.

Many people hold Bitcoin and view it as an asset that can be bought and sold. What are your thoughts on viewing Bitcoin from the perspective of an asset class, like gold, for example?

- If viewed as a conventional asset, for example, then a legal framework is needed to regulate it. Currently, countries have many different views on this issue.

In developed countries with a high level of expertise, the government, through its regulatory agencies, only needs to issue a recommendation, providing citizens with sufficient information and knowledge to make their own decisions about whether to hold, buy, or sell Bitcoin. However, in Vietnam, the legal system is not yet fully developed, and the level of understanding of both technology and finance among the population is still limited. Therefore, in my opinion, extreme caution is necessary.

- Many people are rushing to speculate on Bitcoin. A Bitcoin exchange in Vietnam reported that trading volume has been continuously increasing for the past three months, doubling each month. As a former experienced foreign exchange dealer, and now as Acting Chairman of the National Financial Supervisory Commission, what are your thoughts on this speculation?

- As I said, business is based on supply and demand, and the sudden surge in Bitcoin over the past few weeks, followed by a sharp drop, suggests something is very amiss.

"The Bitcoin bubble could burst at any time," said Mr. Truong Van Phuoc. Photo: Do ​​Manh Cuong.

I believe that when buying or selling any product or asset, you need to see it, whether visually or indirectly. But with Bitcoin, who is custodial your asset? Are these exchanges licensed and legitimate?

Bitcoin belongs to an unregulated space. When mistakes or incidents occur, such as failed transactions, investor hacking, or exchange closures, no one is there to protect us, especially since in Vietnam, the government and the State Bank do not recognize it.

From my experience, I find investing based on herd mentality very dangerous; that bubble can burst at any time.

Therefore, instead of just banning the use of Bitcoin for payments, the government should temporarily ban the buying and selling of Bitcoin as well. This recommendation of mine is not meant to represent a rejection of integration or the development of technology, but rather because, given Vietnam's current unique circumstances, we need to be extremely cautious when embracing it.

- What would happen if Vietnam completely banned the storage and trading of Bitcoin, and vice versa? If it doesn't ban it, what risks do you think it poses to the economy?

- Bitcoin may be held by a group, and price manipulation cannot be ruled out. The volatility of Bitcoin's price also creates an environment for pyramid schemes and scams to thrive in order to raise capital. The price fluctuates without any underlying information or analytical data.

If that bubble bursts, it could pose significant risks. Vietnam is seeking financial stability, and these warnings are crucial at this time. It's also time for regulators to step in and manage the buying and selling of Bitcoin on current exchanges.

- However, some countries and central banks are showing support and interest in Bitcoin and similar cryptocurrencies. What are your thoughts on this?

- As I suggested, the government should ban the buying and selling of Bitcoin. However, given the rapid development of the scientific and technological revolution and the trends of a relatively popular cryptocurrency, central banks are also closely observing and monitoring the situation to respond with timely policy measures.

Bitcoin may not be accepted yet, but once the technology develops, there will be a more suitable form of Bitcoin that overcomes its current shortcomings. Therefore, despite the recommendation for a temporary ban, I think Vietnamese policymakers need to carefully observe these developments.

According to VNE