LEGAL FRAMEWORK ON CRYTOCURRENCY IN VIETNAM

LEGAL FRAMEWORK ON CRYTOCURRENCY IN VIETNAM

With the rapid development of the fourth industrial revolution, many new scientific achievements have been born, including cryptocurrency. In the world, there are many cryptocurrencies such as Etheraum, Litecoin, Bitcoin, Swisscoin, Zcash ... In Vietnam, trading in cryptocurrency is also popular with complex nature. The use of cryptocurrency transactions has left unpredictable consequences, especially in an era of digital revolution, perfecting the legal framework on cryptocurrency is extremely necessary in Vietnam.

1. Regulations of Vietnamese law on cryptocurrency

Firstly, the Civil Code's provisions on cryptocurrency

Cryptocurrency is not a type of property, according to Article 105 of the 2015 Civil Code: “Property includes objects, money, valuable papers and property rights”, from which the cryptocurrency is not based on must be Vietnamese currency because it does not satisfy the signs to be identified as money and not issued by the State Bank of Vietnam, besides, cryptocurrency is also not one of the valuable papers prescribed. Decree No. 112 / ND-CP of the Prime Minister on security transactions.

+ For legal transactions related to cryptocurrency, according to the provisions of Article 117 of the 2015 Civil Code, the general civil transactions established must satisfy the 03 conditions required in Clause 1 which are " (i) Participants in the transaction have legal personality and/or legal capacity in conformity with such transaction; (ii) Participants in the transaction act entirely voluntarily; (iii) The purpose and contents of the transaction are not contrary to the law and/or social ethics”; Besides, for a number of civil transactions must also satisfy the form of transaction set out in paragraph 2.

Based on the provisions of Article 117 of the 2015 Civil Code, the valid conditions for virtual currency transactions are determined: (i) Conditions on legal capacity and behavioral capacity of participating entities deal; (ii) Conditions on the purpose and content of transactions related to cryptocurrency; (iii) Voluntary conditions of entities establishing transactions related to cryptocurrency; (iv) Formality of transactions related to cryptocurrency.

Second, the provisions of the 2005 Electronic Transaction Law regarding cryptocurrency

Transactions related to cryptocurrency are also one of the transactions established and performed via electronic methods, particularly through the digital environment, so electronic transactions related to cryptocurrency also belong to scope of regulation of the Electronic Transaction Law. According to Article 9, when enumerating prohibited acts, there is no provision to prohibit the establishment of transactions related to cryptocurrency through digital means, basically, transactions related to cryptocurrency are transactions. done via electronic messages.

Third, the provisions of the banking law on cryptocurrency

Cryptocurrency is not a currency and is not a legal means of payment in Vietnam. In Clause 6, Article 4 of Decree No. 102/2012 / ND-CP on non-cash payment, it is amended and supplemented by Decree No. 80/2016 / ND-CP on non-cash payment instruments used in payment transactions, payment instruments include: checks, payment orders, collection orders, collection orders, bank cards and other payment instruments as prescribed by the State Bank. In addition, Clause 7, Article 4 of this Decree also stipulates: Illegal payment means are payment instruments not specified in Clause 6 of this Article. According to the above provisions, using cryptocurrency as a means of payment is illegal in Vietnam, because cryptocurrency is not a check, payment order, collection order, bank card ...

Besides, Cryptocurrency is not one of the types of foreign exchange prescribed by Vietnamese law. According to the provisions at Point a, Clause 2, Article 6 of the 2010 Law on the State Bank of Vietnam and point a, Clause 1, Article 4 of the 2005 Foreign Exchange Ordinance: " cryptocurrency is not one of the types of foreign exchange".

Fourth, the provisions of the tax law on cryptocurrency

+ According to Clause 1, Article 3 of the 2007 Law on Personal Income Tax, amended and supplemented in 2012 and 2014, income from goods and service production and trading activities; Incomes from independent professional activities of individuals who have licenses or practice certificates as prescribed by law. According to the above legal documents, cryptocurrency is not identified as a goods or service, so the income earned from trading cryptocurrency is not subject to this Law.

+ Provisions of the Law on Value-Added Tax in 2008, amended and supplemented in 2013, 2014 and 2016, Article 2 of the Law: Value-added tax is understood as tax calculated on the added value of goods services arising in the process of production, circulation or consumption. Therefore, any production, circulation or consumption of goods and services that incur an extra difference from the original price is subject to value added tax. Therefore, virtual money is not subject to value added tax and virtual money dealers are also not required to pay value added tax   in accordance with the above law.

Provisions of the Law on Corporate Income Tax 2008, amended and supplemented in 2013 and 2014. In Article 3 provides: (i) Income subject to corporate income tax includes income from production activities, trading goods and services; (2) Other income. Based on the above provisions, cryptocurrency is not a goods or service as prescribed by Vietnamese law, so the income earned from trading virtual money is not subject to taxable income.

Fifthly, the provisions of the Law on Prevention of Money Laundering on cryptocurrency This Law prescribes measures to prevent, detect, prevent and handle organizations and individuals that commit money laundering acts; responsibilities of agencies, organizations and individuals in the prevention of money laundering; international cooperation on the prevention of money laundering. Accordingly, money laundering is understood as an act of an organization or individual to legalize the origin of property due to a crime, including: (i) Acts prescribed in the Criminal Code; (ii) Supporting organizations and individuals related to crimes in order to shirk their liability by legalizing the origin of assets acquired from crimes; (iii) Possession of the property if it is known at the time of the receipt of the property that the crime was committed, in order to legalize the origin of the property. Therefore, individuals and organizations conducting transactions related to virtual money for the purpose of money laundering are governed by this Law. In addition, people who commit money laundering can be administratively sanctioned under the provisions of Articles 39 to 46 of Decree No. 96/2014 / ND-CP of October 17, 2014 of the Government. Government regulates sanctions against administrative violations in the field of currency and banking.

On the other hand, users of transactions related to virtual money for the purpose of money laundering may also be subject to criminal liability for "money laundering" as provided in Article 324 of the Vietnam Criminal Code 2015. , added 2017.

Sixth, the provisions of administrative law on cryptocurrency.

Cryptocurrency is not a means of payment in Vietnam, so those who use cryptocurrency as a payment instrument will be considered to use illegal payment tools in Vietnam. When the subjects violate regulations on using payment means, they will be sanctioned for administrative violations as prescribed at Point d, Clause 6, Article 27 of Decree No. 96/2014 / ND-CP of October 17, 2014 of the Government. On sanctioning administrative violations in the field of currency and banking; In case the entity performs transactions of cryptocurrency for the purpose of money laundering, he / she will be administratively sanctioned with the sanctioning level corresponding to the violations prescribed in Articles, from Article 39 to Article 46 of the Decree. Decree 96/2014 / ND-CP.

Besides, the State Bank has repeatedly affirmed that Bitcoin and other similar cryptocurrency are not legal means of payment in Vietnam, so on July 21, 2017, the State Bank of Vietnam sent Official Letter No. 5747 / NHNN-PC of the State Bank of Vietnam to the government office to answer the issue of virtual money: “Cryptocurrencies in general and Bitcoin, Litecoin in particular are not currencies and are not methods, lawful payment facilities according to the provisions of Vietnamese law. The issuance, supply and use of virtual currency in general and Bitcoin, Litecoin in particular (illegal means of payment) as a currency or means of payment are prohibited. Sanctions for handling this behavior are stipulated in Decree 96/2014 / ND-CP of the Government on sanctions against administrative violations in the field of currency and banking and the Criminal Code 2015 (amended, additional). In addition, in terms of investing in cryptocurrency, the State Bank of Vietnam has warned many times that this investment has a great potential for investors.

Seventh, Criminal law's regulation on cryptocurrency

The Vietnam Penal Code 2015, amended and supplemented in 2017 provides for criminal liability for the use of cryptocurrency as a means of payment in Vietnam as follows: (i) Issue, supply , using illegal payment instruments may be criminally liable for "Violating the regulations on banking activities, other activities related to banking activities" under Clause 1, Article 206; (ii) According to the provisions of Clause 1, Article 324 of the 2015 Penal Code, acts considered money laundering shall be sentenced to between 1 and 5 years of imprisonment, including: Directly or indirectly participating in financial and banking transactions. goods or other transactions in order to hide the illegal origin of money or property that they have committed; Using money, property which is committed by the offender and is known or has grounds to know that another person has committed an act which commits into conducting business activities or other activities; Concealing information about the origin, true nature, location, movement process or ownership of money or property acquired through their offenses, or obstructing the verification of such information; Committing one of the acts specified in the above items in Clause 1, Article 324 of money and properties known to have been acquired from the transfer, transfer or conversion of money or properties committed by others crime that has.

2. Proposing to finalize the legal framework on cryptocurrency

Firstly, regarding the legal framework of cryptocurrency, the laws of Vietnam such as the 2015 Civil Code, the Law on the State Bank, the Law on Credit Institutions; The Law on Prevention of Money Laundering, the Law on Value-Added Tax, the Law on Corporate Income Tax, the Law on Personal Income Tax, the Law on Electronic Transactions ... all have no provision on cryptocurrency but there are no specific regulations about prohibiting for transactions using cryptocurrency. Therefore, the Government should study the management and handling of cryptocurrency in the direction of banning the use of commodity transactions in any form such as goods, services or as means of payment through a specific legal document to suit the general trend of the whole world as well as the characteristics of our country.

Secondly, Bitcoin and other cryptocurrency are neither currencies nor payment methods in Vietnam. The issuance, supply and use of such cryptocurrency is a violation of Vietnam's laws, so it is also advisable to specify a more specific and clear sanctions in handling these violations./.