V.

            CHALLENGE OF RYPTOCURRENCIES

1. Legal risk

According to a notice from the State Bank of Vietnam, as of January 1, 2018, the
issuance, supply and use of Bitcoin and other cryptocurrencies as a means of payment
is illegal and prohibited in Vietnam.

Acts of issuing, supplying and using illegal means of payment (including Bitcoin and
other similar cryptocurrencies) may be prosecuted for criminal liability under the
provisions of Point h, Clause 1 Article 206 of the 2015 Civil Code (amended and
supplemented in 2017). In addition, the use of transactions related to cryptocurrencies
for the purpose of money laundering may also be subject to criminal liability for
"Money laundering" specified in Article 324 of the 2015 Penal Code, as amended,
added in 2017.

- Risks for users such as: Can become a tool for crimes such as money laundering,
drug trafficking, tax evasion, transactions, payment of illegal assets; the risk of being
hacked, stolen, changed data or stopped the transaction is very high; investing in
Bitcoin contains many risks of financial bubbles, causing damage to investors;
Bitcoin transactions are not governed and controlled by any state management
agency, so Bitcoin owners will bear all risks because there is no mechanism to protect
their interests.

- Currently, the laws of all countries in the world and Vietnam do not recognize a
type called virtual property. Since cryptocurrencies are not physically identifiable and
the identities of the owners of cryptocurrencies are unknown, it may not be possible
to resolve disputes related to cryptocurrency transactions. . Pursuant to Article 105 of
the 2015 Civil Code, cryptocurrencies are not classified as an asset. Cryptocurrencies
do not satisfy the characteristics of an asset. Accordingly, cryptocurrencies are also
not recognized as a currency by Vietnamese law and are not property.

- The State Bank expressed the view that based on the provisions of current laws on
currency and banking, Bitcoin and other similar cryptocurrencies cannot be taken as a
means of payment and the law is not superfluous receive Bitcoin as currency.

- Commercial or civil transactions paid with Bitcoin are anonymous, the subject of
the relationship is not identifiable and the subject of the relationship parties does not
know each other, but only through the Internet. Therefore, when there is an act of
infringing on each other's interests through a transaction using Bitcoin
cryptocurrency, it will be difficult for the party with legitimate rights and interests to
be infringed upon when the the subject of the violation intentionally hides it
accumulate on the Internet.

https://vass.gov.vn/nghien-cuu-khoa-hoc-xa-hoi-va-nhan-van/Tien-ao-va-mot-so-van-
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2.   Risks for Vietnam's economy

In the past 10 years, the world economy has been quite stable, but in 2020, the
COVID-19 epidemic made Bitcoin begin to have real value when the economy
struggled, many currencies depreciated even the USD. Bitcoin now has a real value
but is still based on supply and demand, with no economic value behind it.

Cryptocurrencies affect the inflation control objective of monetary policy. According

to the exchange equation MV = PY (where M is the quantity of money, V is the
turnover of money, Y is the level of real output, P is the price), if the money turnover
V and real output do not Y changes, an increase in the money supply M will lead to
an increase in the price level P i.e. inflation without any effect on the real economy
(Franco, 2015). Franco's research also points to the possible effects of the Bitcoin
cryptocurrency on the monetary policy of the US Federal Reserve (FED). That is, if
Bitcoin is used more, it will lead to an increase in the turnover of money and this
increase can lead to inflation (Franco, 2015).

Although, there is no exact data on the value of cryptocurrencies and the ratio of the
value of this currency in circulation in Vietnam, the "contribution" of this currency in
payment and investment... seems to be seems to have been beyond the control of the
authorities and will likely make the State Bank's inflation control target more
difficult.

Cryptocurrencies make it difficult to control the money supply. Technology platforms

have made information gathering and transaction networks faster and cheaper. This
gives an impetus to the sharing economy and allows financial technology institutions
to capture some of the banking business.

For example, blockchain technology can create a very reliable lending platform for
decentralized transactions, whether the transaction is denominated in fiat currency or
cryptocurrency. This creates a significant challenge for central banks (Raskin and
Yermack, 2016). Specifically, with the fundamental advantage in cryptocurrency
trading being smart contracts, which settle transactions between two parties
independently without the need for a third party, cryptocurrencies are decentralized in
nature. normal currency trading channels.

And as more cryptocurrency payments take place, there's less demand for cash and
central bank-issued reserves; At the same time, there is an additional amount of
cryptocurrencies from outside, increasing the means of payment in the economy.

In addition, there are a number of other consequences. Cryptocurrencies with

investments and scams also cause other consequences that affect the effectiveness of
monetary policy. The magic of cryptocurrencies has attracted many people to the
investment channel in the hope of "terrible" profits, but when the price falls rapidly,
cryptocurrencies have created chaos in society, causing economic instability. macro.
A part of the public puts their time and effort into the cryptocurrency business
without being recognized by the law, the products they make are not included in
GDP.

Another consequence is black credit, leading to market interest rates being pushed up,
the risk of bad debt increasing, contrary to the central bank's efforts on credit policy
to restore production and circulation of goods, lower by interest rates, improving bad
debt situation.

3.  Risks for investors

- Cryptocurrency security dilemmas such as fraud, hacker attacks or insecure

trading platforms. In particular, transactions in cryptocurrencies are more at risk if
they are scammed when there is no protection mechanism because the state does not
recognize this transaction relationship. Even the smartest crypto investors can be
fooled, mostly when they receive a notification that they have "won" valuable gifts
and rewards. The US Federal Bureau of Investigation (FBI) even had to officially
warn that cryptocurrency fraud is on the rise during the Covid-19 outbreak. There
have been cases like Spain 2pris was hacked in early August 2020 and lost up to 1.4
million USD and 2pris is not the only crypto trading platform affected by hackers and
cybercrime and it won't be the last platform either.

- Ignorant investors will be easily led by incorrect communication products and

cause huge consequences. Currently, there are many junk cryptocurrencies, that is,
there is no supporting technology background element, but only created by a number
of organizations and individuals for the purpose of fraudulently raising money.
island”, Mr. Long added.

- Many individual investors do not have capital management skills and account
control when the market is volatile like the past few days, which will lead to huge
losses.

- The current cryptocurrency market is highly susceptible to manipulation by a few

individuals, and the concentration of cryptocurrency ownership on a small number of
addresses reflects that. Just one "whale" selling strongly, the market will wobble.

Due to the absence of a supervisory authority, no intermediary agency, the

relationship between the use of cryptocurrencies is free, spontaneous according to a
convention between the subject parties participating in non-public transactions, due to
the value of cryptocurrencies. Due to strong fluctuations in short operating time, there
are many risks of bubbles, investors cannot anticipate potential risks in transactions,
suffer property damage without being protected by legal mechanisms physical. In
contrast, cryptocurrencies are not governed and controlled by any regulatory
authority, so Bitcoin owners are at their own risk. Price volatility is one of the
attractions of BTC for speculators, but it also brings with it many risks. In its history
of development, BTC has repeatedly made new highs, but many times it has dropped
in price, causing short-term or impatient investors to cut their losses at extremely high
%, up to 25 – 30%. An example of the risk that comes from BTC price fluctuations is
when MT-GOX, the world's largest Japanese Bitcoin exchange, was hacked in 2014
causing the price of Bitcoin to drop from $1,200 to $300. Experiencing a history of
strong price fluctuations from its public launch in 2009 to the present, the price of
BTC currently hovers around $8,000 – $9,000, however no one can be sure of the
value of BTC when it becomes available. can drop dramatically after just one bad
move.

- Liquidity is the most important thing when trading any financial instrument.
Essentially, liquidity is defined as the ease and efficiency with which you can buy or
sell an asset with minimal slippage. However, since cryptocurrencies are an emerging
asset class, the liquidity of many cryptocurrencies is not high or cannot survive in the
market. It is relatively easy for users to buy and sell crypto investments under normal
market conditions, but the risk is often heightened during periods of turmoil or
events.

- Most cryptocurrencies are highly correlated. So you shouldn't fall into the trap of
thinking that spreading your investment across multiple currencies will provide you
with a reasonably diversified portfolio.

- All trading activities can even drag out transaction times, there was a time when a
normal transaction had to wait an average of 78 minutes to be confirmed.

- Plunging into the cryptocurrency game, means taking great risks, rather luck, even
pitfalls. Because it is entirely possible, a certain cryptocurrency, a certain
cryptocurrency exchange, in one fine day completely shut down, all investors' capital
dissipated.

https://vov.vn/kinh-te/canh-bao-rui-ro-lon-khi-dau-tu-vao-tien-ao-843512.vov

https://vksndtc.gov.vn/tin-tuc/cong-tac-kiem-sat/tien-ao-o-viet-nam-va-nhung-khia-
canh-cua-tien-ao-d10-t1027.html

https://vov.vn/kinh-te/canh-bao-rui-ro-lon-khi-dau-tu-vao-tien-ao-843512.vov