Sat, Mar 01, 2014 - Page 15 News List

Vietnam central bank bans banks from using bitcoins


James MacWhyte, a member of a bitcoin trading club, poses with bitcoin medals at the club’s meeting in Tokyo on Thursday.

Photo: AFP

Vietnam has banned its banks from handling bitcoins, saying the virtual currency is not legal tender in the communist nation.

Bitcoin, invented in the wake of the global financial crisis, is a form of cryptography-based e-money that offers a largely anonymous payment system, but its value is highly volatile.

“The ownership, trading and use of bitcoin and other virtual money as an asset carries potential risks for users,” the State Bank of Vietnam said in a statement on Thursday.

It warned against investing in bitcoin or processing transactions using the crypto-currency, saying it was forced to act after seeing a rise in its use on “some trading floors.”

The currency is not widely used in Vietnam, but the bitcoin investor community is reported to be expanding rapidly.

“Since people believe bitcoin would become more valuable in the future, they tend to hoard bitcoins as they hoard gold,” Le Huy Hoa, a member of a bitcoin forum in Vietnam, was quoted as saying by the VietnamNet news Web site.

The world’s bitcoin community was shaken on Tuesday by the disappearance of its biggest exchange, Japan-based MtGox. In Tokyo on Thursday night, investors were calling for a legal probe and possible criminal action against the chief executive of the embattled MtGox, Mark Karpeles.

Japan’s finance minister said yesterday he always thought Bitcoin was suspect and said the country might take action, while US Federal Reserve Chair Janet Yellen said the US central bank had no powers to control the unit, which she said would be very difficult to regulate.

Bitcoin’s rollercoaster week showed signs of settling down yesterday, trading around US$567 at 5:45am, down about 1.3 percent for 24 hours, according to the Coindesk index.

In Vietnam, a bitcoin was trading at roughly 6 million Vietnamese dong (US$300) this week, down from about US$1,000 last month, according to VietnamNet.

Some other countries, including Russia and China, have heavily restricted how bitcoins can be used.

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