In the past year, the global adoption of cryptocurrency has skyrocketed by 880%, as recently released in the 2021 Chainalysis Global Crypto Adoption Index. Vietnam currently leads 153 other countries in the overall index ranking.
Countries are scored based on three metrics: total crypto activity, peer-to-peer exchange trade volume, and trading activity of non-professional users. These are then weighted by purchasing power parity per capita. On a scale of 0 to 1, Vietnam led with a score of 1— and is the only country to score above 0.4 — followed by India and Pakistan.
While exponential growth was observed in the global cryptocurrency when Chainalysis added the sum of all 154 countries’ index scores, Chainalysis’ director of research, Kim Grauer, shared to CNBC that “Vietnam stood out to me because it dominated the index.” In the same article, Matt Ahlborg, a peer-to-peer data analyst, said that Vietnam is one of the top markets for Bitrefill, a company that helps customers live on cryptocurrency by buying gift cards using bitcoin.
Vietnam’s strong performance may appear surprising at a glance, but previous reports have echoed the recent findings. Earlier this year, according to another survey of 42,000 people across 27 countries by Finder, a US-based financial consulting firm, Vietnam also led with the highest adoption rate: 41% of respondents claimed to have purchased cryptocurrency, and 20% reportedly purchased Bitcoin (BTC). And in June, a Cointelegraph article named Vietnam “a standout case” due to ranking 53rd in GDP but 13th in Bitcoin gains.
Furthermore, the growth of e-commerce in Vietnam generates a thriving environment for cryptocurrencies in the nation. After all, payment methods are gradually becoming cashless as citizens embrace the convenience of e-wallets such as Momo, ZaloPay, or Moca. The widespread 4G network and increase in the utilisation of smartphones have also vested Vietnamese citizens with a higher level of comfort and confidence in cashless payment methods.
Cryptocurrency would differ from these current digital currencies in the sense that transactions and records are encoded with cryptography, an unreadable format that can only be deciphered by one with a secret key, rather than by a centralised authority.
In spite of the increased popularity in both trading and usage, Bitcoin and other cryptocurrencies are not recognized as a legitimate form of payment in Vietnam — nor as assets or a form of foreign currency. In fact, using and supplying cryptocurrencies would be liable to fines of near $9000 (205,389,000 VND), or even imprisonment. However, trading, possessing, and investing, lie in a grey area of neither being forbidden nor permitted.
Vietnam’s Prime Minister Pham Minh Chinh officially signed Decision No.942, “approving the digital e-government development strategy in the 2021-2025 period, with a vision to 2030,” as reported by Vietnam Investment Review. More specifically, he has recently urged the State Bank of Vietnam (SBV) to consider projects surrounding cryptocurrency. It is expected to be implemented within the next two years. Though this does not mean changes under the law, it does pave the way for a future in which cryptocurrency could have more weight to both Vietnam’s booming economy and its digitally-savvy citizens.