Khóa luận tốt nghiệp: Current status of cryptocurrency legalization in the world and lessons for

FACULTY OF POLITICAL ECONOMYGRADUATION THESIS CURRENT STATUS OF CRYPTOCURRENCY LEGALIZATION IN THE WORLD AND LESSONS FOR VIETNAM Instructor guides: Dr... FACULTY OF POLITICAL ECONOMYGRAD

FACULTY OF POLITICAL ECONOMY

GRADUATION THESIS CURRENT STATUS OF CRYPTOCURRENCY

LEGALIZATION IN THE WORLD AND LESSONS FOR

VIETNAM

Instructor guides: Dr Nguyen Thi Huong Lan

Student: Lai Anh Son

Class: QH2020E - Economie CLC1

Student code: 20051149

System: HQ Program

FACULTY OF POLITICAL ECONOMY

GRADUATION THESIS CURRENT STATUS OF CRYPTOCURRENCY

LEGALIZATION IN THE WORLD AND LESSONS FOR

VIETNAM

Instructor guides: Dr Nguyen Thi Huong Lan

Lecturer reviews:

Student: Lai Anh Son

Class: QH2020E - Economic CLC1

Student code: 20051149

System: HQ Program

Ha Noi, 2023

thanks to Dr Nguyen Thi Huong Lan with her care and dedicated guidance Not only

an excellent instructor, Dr Nguyen Thi Huong Lan is also a valuable source of

encouragement and creativity for me Your support has helped me develop my

knowledge and research skills significantly.

I also want to express my gratitude to my family and friends, who have always

stood by my side throughout this time Their moral support and encouragement were

a great source of encouragement during the process of researching and writing my

that my teachers will contribute their opinions to help me improve my writing.

I would like to sincerely thank everyone who has accompanied and supported

Huong Lan The data and figures in the graduation thesis have clear origins and have

been collected from official sources The results and information in the graduation

thesis are completely honest and reflect my own research I take full responsibility ifany problems arise related to the content of the thesis

Ha Noi, 2023

Student Lai Anh Son

LIST OF ACROINY/MS -e<e<csce++eeEtettettstteettttsrttrasrrsrrarrtsrrarasrre 9EIST OF FIGURES wessssssossssssssossssssssosessssssosssssossossoesoasossoesossosessssssosscsssososesessosooeseess, 11LIST OF TABLES wessesssessessessvesssesvesssssvessssssesssessessesssesnsssessesasessessnessesanessesseesseenessee 12INTRODUCTION.

1 The need of the Suj€CẨ St HH rưy 13

2 Study overview 142.1 Research situation on the legal nature of cryptocurrency 152.2 Research status on legal vulnerabilities of cryptocurrencies 162.3 Research status on Bitcọn 55c 172.4 Research situation on the current status of legal frameworks for

cryptocurrencies in Vietnam .ccccccccesesseesesseesesseesesseesessesseesseeseesies 182.5 Research on the current status of the cryptocurrency legal frameworkfor foreign COUNTIES 0.0.0.0 cecceseessecstessesseessesseesseeseessesseessessessssesesseaseeseesies 192.6 Research Gaps nhai L

3 Research purposes and tasks - cà Sn nen 213.1 Research Purposes - nhe L3.2 Research missi0ns - c2 Ï

4 Research questions 22

5 Object and scope of the Stud y cccccesesesesseseseeesseseseeneseseseesesesesseneseen Dl5.1 Research Subjects cccccccssessecsiessesseessesseesssessesseeseesssssesssesesseaseesessies 225.2 Scope Of researrChh - cà Ho

6 Research Methods

6.1 Data collection methods

6.1.1 Collection of secondary data

6.2.2 Comparison

6.2.3 Descriptive statistics

7 Structure of the thesis

CHAPTER 1: THEORETICAL FOUNDAATIOINS -« 5-5-<©5<+ 28

1.1 General concept of crypf0CUFT€ICY 5c 55 55ccccsseeeererrrrerree 281.1.1 Blockchain and CTDfOCHIF€HCV 5S SnStketeEkrekrkerrkerree 281.1.2 Factors affecting cryptocurrency fradiHg - 291.1.3 Classification of cryptOCUrrencteS - 5S eetees ee teeeeseeneneees 34

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1.1.4.4 Digitizing MONEY 5S Street,1.2 Time of appearance and history up to now, some outstanding

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1.2.2.2 Some Vietnamese CryptOCurrenCieS - 5S ecsecrevererrvee 44CHAPTER 2: CURRENT STATUS OF LEGALIZATION OF

CRYPTOCURRENCIES IN THE WORLD 45

2.1 Overview of legalization of crypto around the world 45

2.2.1 Developed country

2.2.1.1 The US

2.2.1.2 Europe

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CHAPTER 3: CURRENT STATUS OF CRYPTOCURRENCY REGULATION

IN VIETNAM

3.1 Market situation and legalization of crypto in Vietnam

3.1.1 Overview of the cryptocurrency market in Vietnam 84

3.1.2 Current status of cryptocurrency regulation in Vietnam 89

3.2 The urgency for creating a legal and management framework for

CH Yt Hah ViệtfiAHH ///2.02//002002.262660662 066000 96CHAPTER 4: LESSONS FOR VIETNAM ©es©ce<ceecesseeeeeesrs 100

4.1 Current socio-economic context in Vietnam - 100

4.1.1 International economic iHf€gFdfÌ0H - cesses LOO4.1.1.1 Period 2001 - 2006 -2- +©5+55+5++cs+escxsrsrrerrerxrrrrer 1004.1.1.2 The period after joining the WTO to the pr€S€HI -. - 1014.1.2 Infrastructure and ƒäcilifies - 555cc 1034.1.2.1 Electronic payment infrastructure «S5 S+ec+ererertexerereeeee 103

4.1.2.2 Internet infrastructure

4.2 Lessons on legalization for crypto in Vietnam - -55-5+ 1104.2.1 For the State cọ cằcSằ sec LO

REFERENCES 119

Acronyms Meanings

AFTA ASEAN Free Trade Agreement

AKFTA ASEAN-Korea Free Trade Agreement

AML Anti-Money Laundering

ASEAN Association of Southeast Asian Nations

BSA Bank Secrecy Act

BTA Bilateral Trade Agreement

CPSS Committee on Payment and Settlement Systems

CPTPP Comprehensive and Progressive Agreement for Trans-Pacific

Partnership

CTFC Commodity Futures Trading Commission

DAO Decentralized Autonomous Organization

DLT Digital Ledger Technology

EEA European Economic Area

EU European Union

FDI Foreign Direct Investment

FinCEN Financial Crimes Enforcement Network

FSA Financial Services Agency

GFSC Gibraltar Financial Services Commission

ICO Initial Coin Offering

IMF International Monetary Fund

IMO Initial Miner Offerings

KYC Know Your Customer

MiFID Markets in Financial Instruments Directive

NIFA National Internet Finance Association of China

PBOC People’s Bank of China

PSA Payment Services Act

QR Quick Response

SAFT Simple Agreement for Future Tokens

SEC Securities and Exchange Commission

UNODC United Nations Office on Drugs and Crime

VFA Virtual Financials Assets Act

WTO World Trade Organization

LIST OF FIGURES

Figure 1.1: The history of formation and operation of BitcOin 40

Figure 1.2: Chart showing Bitcoin's dominance in total cryptocurrency market

capital over the period from 2014 to 2023 - :cscc+ccrerseerrereeerrree.e AZ Figure 1.3: Price chart of SHIB through the years from 2021 to present 43

Figure 2.1: Map showing cryptocurrency regulations in countries around the world

including financial LAWS - +: + tt té 21.11 rrrerrree 45

Figure 3.1: Price of Bitcoin skyrocket in the period of March 2020 to April 2021 86Figure 3.2: Major events affecting the world Crypto industry in 2022 87

Figure 4.1: Number of mobile phone users with Internet connection in Vietnam

(MAILIONS) oes 104

Figure 4.2: Chart showing the number of Internet users in Vietnam in the period

ftom 2013 - 2023 scsscssssssossesssssscsssesseassssssessssscsssessoassesssessesezsseassesssasnsssssssesssassestsese LOD

LIST OF TABLES

Table 1: Opion of EXpTS€ - St tt 2 E12 rrerererrree2

1 The need of the subject

The explosion of the 4.0 Scientific and Technological Revolution taking place

globally has created many outstanding achievements for all humanity One of themost groundbreaking inventions in the field of technology combined with finance is

cryptocurrency, also known as Crypto Currency Crypto is a type of digital asset on

the Blockchain platform that acts as a currency for online payments or storage andinvestment

The most popular currency in the world today is Bitcoin, which is the currency

with the largest market capitalization As of September 20, 2023, the price of 1Bitcoin is equivalent to 27,000 USD (about 658 million VND) with the highest priceever reaching 69,000 USD at the end of 2021 Cryptocurrency is considered superior

in reducing inflation developed during the economic crisis, convenient and fast

transaction methods, technology trading platforms that can connect everywhere.

Therefore, cryptocurrencies are increasingly accepted by many countries as a type ofcurrency Currency may be allowed to circulate and be used in payments and

exchanges.

However, along with that strength, cryptocurrencies still have manyshortcomings, especially in management and legalization Countries need to have

new sanctions and policies to manage cryptocurrencies because of their

characteristics Therefore, not all countries in the world accept and legalize the use

of cryptocurrency Some countries around the world such as the US, Japan, EU have

policies and sanctions to legalize Crypto and vice versa, there are countries that have

completely banned these market activities, typically China

Based on the practice and legal risks of Crypto, Crypto is the currency of the future, an inevitable trend in the process of change and development of money

through many studies and comments of experts economist Therefore, building a

legal framework to legalize and manage the potential market is extremely necessary for countries around the world in general and Vietnam in particular.

In Vietnam, up to now it can be said that cryptocurrency is currently a new

trend of the economy The rate of cryptocurrency adoption and transaction

capitalization in Vietnam is increasing, combined with the country's digital economyorientation, cryptocurrencies have become more popular than ever However,

participating in cryptocurrency transactions in Vietnam still has many shortcomings

in terms of law as well as the legal framework in general For the above reasons, thetopic "Current status of Cryptocurrency legalization in the world and lessons for

Vietnam" is necessary to research the situation of legalization of the Cryptocurrency

market in the world to draw lessons and apply them applied to the Vietnamese legalframework in legalization

2 Study overview

In the current context of international economic integration, accompanied by

the emergence of cryptocurrencies and their impact on daily life, there have beenmany research projects both in Vietnam and Vietnam and internationally are carried

out to clarify the characteristics, uses and harms that this type of money can cause In

addition, the legal issue of cryptocurrency has also been researched by many people

to better understand the risks and create experience for countries in legalizing it.

2.1 Research situation on the legal nature of cryptocurrency

Cryptocurrency in the world today has only appeared and existed for 15 years,

it can be said that this type of money is still too new compared to other forms of

money that have existed for thousands of years Therefore, this is one of the issuesthat need to be researched An article by Do Giang Nam and Dao Trong Khoi in 2021

called: “Further Discourses on the Legal Nature of “Cryptocurrency” Under

Comparative Property Law” gave us an overview of the legal nature of

cryptocurrency under Comparative Property Law Author proposed that

"cryptocurrency" should be considered a "non-traditional" asset - a crypto-asset

created using a combination of blockchain technology and cryptographic techniques

to ensure authenticity in asserting the rights and interests of a legal entity

Cryptocurrencies cannot be considered money, commodities or securities but must

be included in a separate asset category

The legal nature of cryptocurrencies for the United States was clarified by Jin

Enyi and Ngoc Le in their study in 2017 The authors concluded that regulation of

licensing for cryptocurrency mining and trading activities at an international level isnecessary Customers need to be identified when buying and selling cryptocurrencies,

and introducing a special verification procedure for Bitcoin users will prevent the

misuse of cryptocurrencies for money laundering and financing of terrorism Theresults of the analysis led to the introduction of a definition and highlighting the main

characteristics and functions of cryptocurrencies It has been proven that

cryptocurrency is a new type of electronic currency stored in computer memory, thecryptocurrency value is managed through a technical device Cryptocurrency is a new

means of payment and does not require access to a deposit account.

It can be seen that research articles all believe that cryptocurrency is not

considered a type of money or commodity but must be considered a special type of

asset and countries around the world need to build and update legal frameworks your reason to be able to absorb this type of "money".

2.2 Research status on legal vulnerabilities of cryptocurrencies

A major problem currently causing many people to lose faith in

cryptocurrencies is the problem of related crimes Activities such as money

laundering and fraud have been and are quite obvious problems Research by Trozze,

A., Kamps, J., Akartuna in January 2022 has given us a better understanding of thesecrimes The authors tell us that the majority of scams can be considered cyber -

enabled (instead of cyber - dependent) Another finding is that there is still a lack of

consistency (or lack of existence) of definitions of the different types of fraudidentified in the literature

Research: “IS BITCOIN THAT POISON? CRYPTOCURRENCY, CRIME, AND COUNTERFEITING (CCC)” by Eric Engle, 2016 researched the dangers of

cryptocurrencies in general and Bitcoin in particular The author concluded that

cryptocurrency is a threat to U.S and international security as well as investor savings and the markets themselves by undermining investor confidence He has also suggested the best way to regulate the US market is to use all legal measures available

to the US to make cryptocurrencies illegal, subject to asset confiscation and

increased transaction costs for cryptocurrency transactions through the SEC

One aspect that many people are interested in related to the legal issues of

cryptocurrency is money laundering and this is made quite clear by Duong Huu Thinh

in his research article in 2019 The author talks about the level of legal risk when

dealing with cryptocurrency and money laundering models for this currency and how the state can provide solutions to respond to the risk An outstanding solution is the

application of KYC to cryptocurrency transactions

2.3 Research status on Bitcoin

Bitcoin is the most prominent cryptocurrency, and there have been many

essays, articles and general studies about this Bitcoin The study "Bitcoin Management in the Digital World Era of Vietnam" by Tran Tu Uyen in 2020 showed

us the current situation of Bitcoin in Vietnam This study has explained Bitcoin

through aspects of risks, benefits as well as its influence on the world's political

economy as well as in Vietnam In addition, the author also spoke clearly aboutBitcoin management in Vietnam and proposed solutions to perfect Bitcoin

management in Vietnam Regarding the historical aspect of formation, there are also

many research articles on this issue both abroad and in Vietnam The study

"HISTORY OF CRYPTOCURRENCY - BITCOIN" by Thuy Loi University has

given us a clear understanding of the formation process of this currency in particular

and the entire cryptocurrency industry in general A similar article in 2022: "AHistory of Bitcoin" by Usman W.Chohan also gave us specific information about the

history of Bitcoin's formation through the periods from its inception to the present.

its whole future

The book “Beyond Bitcoin” by Hanna Halaburda, Miklos Sarvary, Guillaume

Haeringer gave us a very specific view of Bitcoin and related fields Book provides

insightful and up-to-date analysis of the economic dynamics related to Bitcoin andother cryptocurrencies It provides an in-depth, rigorous analysis of what could be

effectively decentralized and how this decentralization would work The book is also

fully updated on cryptocurrency and new chapters on smart contracts and enterprise

blockchain

2.4 Research situation on the current status of legal frameworks for

eryptocurrencies in Vietnam

There have been quite a few research articles in Vietnam on the field of

cryptocurrency A study quite close to this research is an article in the VietnamAcademy of Social Sciences by Tran Van Bien and Nguyen Minh Anh in 2020, which

provided assessments on the level of meeting requirements adjustments to our

country's laws on cryptocurrency issues and from there, propose a number ofrecommendations to guide the development and improvement of appropriate laws

This article has contributed a lot to my research by pointing out the existing laws on cryptocurrencies in Vietnam and it has evaluated the good and bad aspects of the

current laws Have This can be said to be one of the articles that clearly analyzes the

cryptocurrency legal framework in Vietnam and provides objective assessments in

this issue

Many countries in the SEA region itself have legalized cryptocurrencies such

as Singapore, Thailand, and the Philippines In the above countries, cryptocurrencies

are legal to be a payment, transaction and holding tool, but for Vietnam,cryptocurrencies are only allowed to be held and traded Nguyen Thi Hong Nhung's

research article, Nguyen Thi My Hanh, 2019 gave us an overview of the legal status

of cryptocurrencies in France, Thailand and Vietnam Regarding Vietnam, the twoauthors have clarified understand Vietnam's current legal framework by posing two

questions: "The first is whether according to current Vietnamese law,

cryptocurrencies are considered goods or not that can be traded." and collect taxesfor those transactions? Second is whether cryptocurrency is considered a means of

payment?” Through the results of analysis and clarification, the two authors

concluded that cryptocurrencies can and should be considered goods in civil

transactions and cryptocurrencies can be traded as securities similar to the Thai model.

2.5 Research on the current status of the cryptocurrency legal framework forforeign countries

There are also many research articles in Vietnam about international

experiences when legalizing cryptocurrencies Research by Cao Thi Thuy Trang and

Nguyen Khanh Tin in 2020 has given us a quite specific view of the policies of the

EU, UK, US, China and Thailand in the legal management of cryptocurrencies From

there, the article compared the legal and policy framework with Vietnam to be able

to make suggestions and recommendations for Vietnamese law on this issue

The legalization of cryptocurrency currencies has happened in quite a few

countries, and according to a report by the US Library of Congress in 2018 on the

legal status of Bitcoin in several countries around the world, opinions can be divided.countries regarding the legality of crypto currency into 3 main groups: Recognize

crypto currency as a means of payment, recognize cryptocurrency as a special asset but not a means of payment and Do not recognize cryptocurrency and Prohibit all types of transactions related to cryptocurrency.

In Russia, cryptocurrencies are quite popular and are traded quite a lot Russia

is a very active country in seeking to clarify the status of Bitcoin and introduce

technology regulations to develop the economy according to this trend (Anna

Zharova, Ian Floyd, 2018) Although very positive, Russia is still quite concernedabout whether cryptocurrency can develop strongly or not in the face of widespread

hostility from traditional banking institutions.

When legalizing cryptocurrencies, national governments need to determinefactors that can predict their legal status Mikhail Stolbov, Maria Shchepeleva

explored this very well in their 2020 research paper They took a sample of 134 countries both legal and illegal to use cryptocurrency and ran the model to produce

the results Factors such as values of voices, accountability index, capturing

governance quality, will increase the circulation capacity of cryptocurrency, while factors such as enhanced access to electricity, conductive to intense cryptocurrency

mining will decrease the circulation capacity of cryptocurrency

When talking about countries using cryptocurrency, we have to mention

China China is the largest country and the most important market for mining,investment and research And to achieve this, China has a fairly solid legal framework

and most recently the "Cryptography Law of the People's Republic of China" has

demonstrated this Research by John Riley, 2021 delves into the history of China'scryptocurrency laws starting from 2014 to 2021 These laws are expected to continue

to shape the development of the global cryptocurrency market.

Thailand is a rather special case in the legalization of cryptocurrencies, when

in March 2022 it banned the use of cryptocurrencies as a payment method, but did

not affect trading and investment activities private However, cryptocurrency

investment and trading in Thailand shows no signs of slowing down Therefore, asolid and stable legal framework is what Thailand lacks Rattapol Barracks, Tanpat

Kraiwanit, 2023 opined that Thailand needs to establish a comprehensive plan and

roadmap with policymakers, regulators, investors, the Bank of Thailand (BOT), thegovernment and especially the Thai Securities and Exchange Commission (SEC)

cooperated This will combine and build a sustainable growth orientation, especially

in the financial and technology sectors

There are also many topics related to cryptocurrency such as investment, exchange and other aspects, but because of the scope of the research, I would like to

ask permission not to mention those topics

2.6 Research Gaps

There have been quite a few research topics on the legal issues of

cryptocurrency as mentioned in the section above These topics have outlined the current situation of cryptocurrency in terms of transactions, purpose of use and how

it is being used in Vietnam (Tran Van Bien, Nguyen Minh Anh, 2020; Phan Dang

Hai, Nguyen Phuong Thao, 2022; ) In addition, in the world there are also many

topics related to cryptocurrencies and their legal issues applicable to each respectivecountry such as China, Russia, Ukraine, America, However, legalization is a

missing issue in research on cryptocurrencies and especially in Vietnam when research often focuses on strengthening Vietnam's policy of making it stricter and

- Clarifying the status of legalization of cryptocurrencies in prominent

countries in this field in the world

- Clarifying the status of legalization of cryptocurrencies in Vietnam

through the process of forming laws, through announcements of the

Government and responsible agencies

- State the current status of infrastructure including electronic payment infrastructure and Internet infrastructure in Vietnam

- Offering lessons for Vietnam in legalizing cryptocurrencies and lessons

for companies in the sector and participants in this market.

4 Research questions

With the rapid development of cryptocurrencies in recent years, the

legalization of cryptocurrencies has become a prominent issue Therefore, thisresearch article will answer these questions:

- What is the current status of cryptocurrency legalization in the world?

- What is the current status of cryptocurrency legalization in Vietnam?

- What solutions can Vietnam come up with to perfect the legal

framework for cryptocurrencies?"

5 Object and scope of the study

5.1 Research subjects

The research object of this topic is cryptocurrencies and the legalization of

cryptocurrencies in countries

5.2 Scope of research

The research scope of the topic is limited to the following two aspects:

- Space: The topic is an overview of the nature of cryptocurrency and the

status of its legalization in countries around the world From there, we

provide lessons on legalization for Vietnam.

- Time: The topic focuses on researching the cryptocurrency market and the status of its legalization worldwide in the period from 2018 to 2023.

6 Research Methods

6.1 Data collection methods

6.1.1 Collection of secondary data

The secondary data used in the study are taken from previous research articlesrelated to this field Research articles are collected from Internet sources such as

Google Scholar, Springer, Emerald, ScienceDirect and other information sources.

In addition, electronic data such as capital, price, trading volume will be takenfrom CoinMarketCap and some leading exchanges such as Binance, OKX,Crypto.com, etc

6.1.2 Collection of primary data

This research article will collect primary data through the method of consultingexperts Because this is a relatively new issue and needs the opinions of people with

deep expertise, gathering the opinions of experts will be necessary to get reasonable

opinions and ideas and the most logical Experts' opinions will be collected through

a questionnaire with questions related to the issue of cryptocurrency legalization in

Vietnam The questionnaires are as follow:

Table 1: Opinions of Expertise

Experts Surveyed Mr Nguyen Hoang Quan - Deputy Head of Professional

Department of the crypto community: TradingtoliveEw

Mr Luan Nguyen - One of the Admins of the Crypto

community: TradingtoliveEw

Mr Nguyen Thanh Khuyen - Active in the Blockchainfield since 2013

Mr Le Manh Hung Cuong - Participated in

cryptocurrency trading since 2015 and was a member of

the Coin 98 team

Survey Time From September 1, 2023 to September 30, 2023

Location and Method

of Survey

Survey via text message or phone call

Survey content 1 Do you see the issue of legalizing Vietnamese

cryptocurrency as an urgent issue?

2 Do you trade or work related to the cryptocurrencyfield?

3 How do you see the status of cryptocurrency use in

Vietnam?

4 How do you feel about Vietnam's current situation regarding the legal framework, facilities, and market?

5 What is the reasonable and appropriate point of

Vietnam in legalizing Vietnamese cryptocurrency for

you?

6 How do you feel if cryptocurrencies are legalized and

freely traded?

7 What elements do you feel need to be improved in the legal framework to be able to do this?

8 What elements do you feel need to be improved infacilities and infrastructure to make this happen?

9 In your opinion, what do those involved in

cryptocurrency trading need to prepare to adapt to the

- Mr Luan Nguyen answers questions 4 and 7:

Vietnam's current situation still has many shortcomings

in the cryptocurrency market or maybe the public is not aware of it because there is no publicity He also believes

that Vietnam needs to improve the penalty factor for

fraudulent acts related to this market.

- Mr Nguyen Thanh Khuyen answers questions 5,6 and

8: The reasonable and appropriate point of Vietnam is that

Vietnam is following the world's trend In addition, he also said that if cryptocurrency in Vietnam is legalized

and becomes free, it will be a pretty good thing, opening

up more comfortable and transparent transactions He

also gave an opinion that Vietnam's current laws on

electronics are quite loose and the government needs to

improve the legal framework by applying transaction

ownership laws

- | Mr Le Manh Hung Cuong answered questions 3,4,8:

He said that the current use of cryptocurrency in Vietnam

is only a small part and the reason for this is the lack of a

legal framework protect Regarding question 4, he

believes that part of the current situation of Vietnamesecryptocurrencies is that the gloomy economy makes

people look to investment channels to earn additional

income but the lack of a legal framework to protect

security causes many frauds to occur He also has a recommendation for the state for infrastructure and facilities, which are Vietnam's own Apps and need to be

linked with banks to facilitate transactions

6.2 Data information processing methods

6.2.1 Analysis and synthesis

In this research article, analysis and synthesis methods will be used so we can

go deeper into the legalization of cryptocurrency in Vietnam The research articles

collected and referenced will be analyzed and then synthesized to summarize the

main ideas and important arguments to achieve the purpose of this research article, which is: "Analyze and present provide appropriate lessons for Vietnam in the issue

of legalizing cryptocurrencies through sanctions and policies in the near future."

6.2.2 Comparison

The comparative method will be used quite a lot in the research Countries will

be compared with each other countries such as China and the US in terms of facilities, current economic situation, legal framework for cryptocurrencies, etc to be able to

find similarities as well as differences between countries These comparisons can

found in Chapter 2 and 3 Comparisons in time frame will also be used to Describe

the development in stages in a certain country or a cryptocurrency From there, wecan draw lessons and learn from experience to come up with the most optimal

solution for legalizing cryptocurrency in Vietnam.

6.2.3 Descriptive statistics

Collected data related to cryptocurrencies such as transaction volume in

countries around the world will be processed through descriptive statistical methods Because the data is quite simple and easy to process, this research only uses Excel to

handle basic operations

7 Structure of the thesis

In addition to the introduction and conclusion, the thesis is divided into 4

chapters as follows:

e Chapter 1: Theoretical Foundations

® Chapter 2: Current status of legalization of crypto in the world

® Chapter 3: Current status of legalization of crypto in Vietnam

e Chapter 4: Lessons for Vietnam.

CHAPTER 1: THEORETICAL FOUNDATIONS

1.1 General concept of cryptocurrency

1.1.1 Blockchain and Cryptocurrency

Blockchain is a groundbreaking technology, used to store and transmit data in

a secure and decentralized manner It works by linking data into blocks and then

concatenating them into a data series The great strength of blockchain is itsdecentralization, without the need for centralized control from any organization or

individual Instead, the data is stored on a network of computers around the world,

contributing to its agnosticism and security Each block on the blockchain containsinformation as well as a hash of the previous block and a hash of the data within it

This creates security and the ability to easily verify data Any change in the data will

change the hash code, leading to detection of errors or fraud

Blockchain is also famous for its transparency, as data is usually public and

can be inspected by anyone This helps prevent fraud and creates trust in transactions.

In addition, blockchain technology also supports the use of smart contracts, programsthat automate transactions based on predetermined conditions With its diversity of

applications, blockchain is not only a tool in the monetary sector, but is also widely

used in many other fields such as supply chain management, medical datamanagement, elections, digital asset management, and many other fields Blockchain

marks an important step forward in the way we manage and transact data and assets

in the digital age

Blockchain is the platform that creates cryptocurrencies as all cryptocurrencies

are built on respective blockchain systems.

Cryptocurrency has many definitions According to the definition of the Bank for International Settlements (BIS), electronic convenience is stored value or prepaid

product, in which information about the customer's available funds or value is stored

on an electronic device owned by the customer.

ECB is the abbreviation for European Central Bank The ECB is the central

bank responsible for the monetary policy of European Union member states that use

the Euro currency The ECB also has its own definition of cryptocurrency:

cryptocurrency is monetary value stored on an electronic device commonly used toperform payment transactions for other organizations to issue

A study by the Arab Academy for Banking and Financial Sciences defined

cryptocurrency as money or money-equivalent assets stored, managed and exchanged

on digital electronic device systems, and especially via the Internet

As we can see, the definitions have certain things in common: Bitcoin is money

and is stored on an electronic device, and it can be used as an asset, or a means of

payment, exchange.

1.1.2 Factors affecting cryptocurrency trading

Cryptocurrency trading is influenced by a variety of factors, and these factors

can have a significant impact on the prices and volatility of cryptocurrencies Here

are some of the key factors that affect cryptocurrency trading:

e Market Sentiment: The influence of market sentiment on cryptocurrency

trading cannot be overstated Cryptocurrency markets are highly speculative,and emotions often drive trading decisions Positive news, such as a prominent

company announcing support for a particular cryptocurrency or a regulatory

body endorsing the technology, can spark optimism among investors, leading

to increased demand and higher prices Conversely, negative news, like a

security breach or a regulatory crackdown, can lead to fear and panic selling, causing rapid price declines Understanding market sentiment and

distinguishing between short-term fluctuations and long-term trends is

essential for traders.

Regulation: Regulatory developments have a significant impact on

cryptocurrency trading Governments around the world are continuallyshaping the regulatory landscape for cryptocurrencies Regulations can range

from fully embracing cryptocurrencies and providing a legal framework for

their use to banning or heavily restricting their use The uncertainty around

regulations can lead to volatility in cryptocurrency markets For instance, a

country's decision to embrace cryptocurrencies can lead to a surge in tradingactivity, while regulatory crackdowns can have the opposite effect Traders

and investors must stay updated on regulatory changes to anticipate their

potential impacts

Adoption and Use Cases: The adoption of cryptocurrencies for real-world use

cases is a fundamental driver of their value As cryptocurrencies find practical

applications, such as cross-border remittances, online purchases, and decentralized finance (DeFi) platforms, their demand and utility increase This,

in turn, affects trading activity For example, the rise of decentralized

applications (dApps) on blockchain platforms can lead to increased demand for the native tokens used within those applications Traders often monitor

trends in adoption and use cases to gauge the potential future value of acryptocurrency.

Market Liquidity: Liquidity plays a critical role in determining the ease with

which traders can enter and exit positions without significantly affecting theprice High liquidity cryptocurrencies tend to have more stable prices and

narrower bid-ask spreads, making them attractive to traders In contrast, liquidity cryptocurrencies are more susceptible to price manipulation, as large

low-trades can cause substantial price swings Market liquidity can be influenced

by factors such as trading volume, the number of participants, and the presence

of market makers Traders often prefer to engage in markets with high liquidity

to reduce the risk of slippage and adverse price movements

Market Capitalization: Market capitalization, calculated by multiplying the

price of a cryptocurrency by its total circulating supply, is a widely used metric

to assess a cryptocurrency's size and relative importance in the market

Cryptocurrencies with high market capitalization, like Bitcoin and Ethereum, are often considered more stable and established Their large user base and

extensive trading volumes make them less prone to extreme price fluctuations

On the other hand, smaller cryptocurrencies, often referred to as "altcoins," may exhibit greater price volatility due to their lower market capitalization.

Traders frequently consider market capitalization when assessing the risk and

potential rewards associated with a particular cryptocurrency.

Technology and Development: The technological aspects of a cryptocurrency

play a crucial role in its trading dynamics The underlying blockchaintechnology, consensus algorithm, and development updates can significantly

impact the perception of a cryptocurrency Technological advancements, such

as the implementation of layer 2 solutions to improve scalability or enhanced

privacy features, can attract interest and investment Conversely, security

vulnerabilities or technical issues can lead to a loss of confidence and

decreased trading activity

Security and Hacks: The security of cryptocurrency exchanges and theunderlying blockchain networks is paramount High-profile security breaches

and hacks have had a severe impact on the cryptocurrency market Investors and traders are wary of platforms with a history of security vulnerabilities A

successful attack can result in substantial financial losses and erode trust in the

cryptocurrency space, leading to a temporary or even prolonged decrease in trading activity.

Macroeconomic Factors: Broader economic conditions and geopolitical eventscan have ripple effects in the cryptocurrency market Cryptocurrencies are

often seen as a hedge against economic instability, inflation, and currency

devaluation During times of economic uncertainty or currency crises, some

individuals and institutions turn to cryptocurrencies as a store of value.

Economic indicators, monetary policies, and global geopolitical tensions caninfluence investor sentiment and trading volumes

Market Speculation: Cryptocurrency markets are characterized by a significant

degree of speculation Traders often engage in speculative activities based on

short-term price movements and market sentiment Speculation can lead toprice bubbles and rapid price fluctuations, which can be exacerbated by

leverage trading and the fear of missing out (FOMO) Speculative trading

strategies can amplify market volatility

Media Coverage: Media outlets and social platforms can play a pivotal role inshaping public perception and sentiment towards cryptocurrencies Positive

news stories, endorsements from influential figures, and bullish forecasts can

trigger buying frenzies, while negative headlines or regulatory concerns canprompt panic selling The 24/7 news cycle and the speed at which information

spreads on social media can lead to rapid and often exaggerated market

reactions

e Market Manipulation: Market manipulation is a concern in the cryptocurrency

space Techniques like pump-and-dump schemes, where the price of a

cryptocurrency is artificially inflated through coordinated efforts and then soldoff for profit, can lead to significant price fluctuations Cryptocurrency

markets are relatively young and less regulated compared to traditional

financial markets, making them susceptible to manipulation

e Halving Events: Some cryptocurrencies, such as Bitcoin, have programmed

supply reduction events known as halving These events reduce the rate at

which new coins are created, impacting the supply-demand dynamics of thecryptocurrency Halving events can influence the price of a cryptocurrency as

investors speculate on their potential impact.

e Competing Technologies: The cryptocurrency space is highly competitive,

with thousands of cryptocurrencies and blockchain projects vying for attentionand investment Competition and innovation in technology can divert interest

and capital from one cryptocurrency to another New projects with

groundbreaking features or use cases can disrupt the status quo and affect thetrading landscape

It's essential for cryptocurrency traders and investors to stay informed about

these factors and conduct thorough research before participating in the market, as thecryptocurrency space is known for its high volatility and risk Additionally, risk

management and a long-term perspective can help mitigate the impact of short-term

market fluctuations

1.1.3 Classification of cryptocurrencies

1.1.3.1 Bitcoin - Altcoin

Bitcoin is the first cryptocurrency to appear in the world and it was invented

by an anonymous individual or organization using the name Satoshi Nakamoto as

open source software in 2009 And Satoshi himself said: “Bitcoin: A peer to peerElectronic Cash System”, meaning Bitcoin can be exchanged directly using devices

with an Internet connection without going through any intermediary financial

institution

Altcoin is an abbreviation for "Bitcoin Alternative" or all coins other than

Bitcoin and "replacing" Bitcoin Altcoins are electronic currencies that were born

after Bitcoin and they are mostly encrypted from Bitcoin and each has a different

purpose These Altcoins are all technologically inspired by Bitcoin's blockchain but use a different blockchain than Bitcoin's loop.

In the early 2010s, the number of Altcoin is small, just over 100 different

codes, but after the formation of Ethereum in 2015 and its popularity in 2017, the number of Altcoin market has increased rapidly The reason for this is that Ethereum

(ETH) has made it easier than ever for projects to create their own cryptocurrency

As of October this year, there are currently nearly 9 thousand different Altcoin codes being traded.

1.1.3.2 Coin - Token

Coin is a kind of cryptocurrency originating from its own blockchain Coins

all exist on their own blockchain network: BTC operates on Bitcoin's blockchain,ETH is used in ETH's blockchain, XMR exists on the Monero blockchain, Coins

have similar features to money: They can be replaced, divided, exchanged, and

limited in supply, so they are often used as payment in transactions

Token differs from Coins in that they do not have their own blockchain platform but they depend on other blockchain platforms to operate ETH is the most

popular platform for Token creation because of its Smart Contract feature, tokens

created on the ETH blockchain are often called ERC20 tokens and a good example is the stablecoin Tether (USDT) with its large trading volume 3rd in crypto The

intended use of Tokens is also different from coins: Gives owners access to project

functions such as Basic Attention Token (BAT); Represents an investment in a certain project (ICO), but buyers of this token will hardly be guaranteed because there

is no supervision by regulatory agencies and no KYC

1.1.4 Characteristics of cryptocurrencies

1.1.4.1 Decentralization and Globosity

This is a characteristic that makes Crypto special User transaction activitieswill not need to go through a certain server but only through a certain distribution

network This decentralization aims to reduce the trust traders need to have with each

other while also preventing the ability to exercise power or control over each other inways that degrade the functioning of the network

Famous cryptocurrencies such as BTC and ETH demonstrate their

decentralization by having their systems supported by networks of independentcomputer “nodes” that reach consensus through algorithms such as Proof of Work

(PoW) to process and record all transactions.

Not relying on a central authority creates a sizable advantage over a centralizedorganization in handling incidents For a centralized system, just one failure of the

management entity will cause the entire organization to be disabled, and for a

decentralized system, it will continue to operate even if there is an error in the system.system because they are different subjects

However, a major drawback in the decentralized system is that there is no unified vision and the division of responsibilities is not clear, so organizational

efficiency may decrease compared to Centralized And in fact in 2020, the Bitcoin

network consumed a whopping 70+ terawatt hours of electricity despite only achieving a performance of 4 to 7 transactions per second.

Due to its independent nature, Crypto is not controlled by any country

Cryptocurrencies were designed to be decentralized, meaning central authority does not control them Therefore, Crypto can be traded anywhere in the world, and is

considered a non-national currency These people, especially those in developing

countries, who do not have access to conventional financial institutions, now enjoy

greater financial independence and empowerment Along with this, people all overthe world will have the opportunity to invest in Crypto, especially long-standing and

fundamental coins like BTC and ETH.

Another characteristic is Crypto's transaction speed Because Crypto does notinvolve any third party, their transaction costs will be smaller, thereby increasing the

volume of transactions Because there are no geographical barriers to Crypto, this

makes for fast and easy transactions for corporations in all parts of the world

In theory, Crypto can be traded anywhere, however Crypto trading in some

countries may be illegal or have limited functionality The country with the second

largest economy in the world, China is one of 9 countries in the world that has an

"absolute" ban on Crypto In addition, in countries such as Russia, Canada, and Saudi

Arabia, Crypto is legal but trading it through banks is prohibited In Vietnam, trading

and holding is legal, but using Crypto as a payment tool is illegal According to theprovisions in Clause 6, Article 27 of Decree 96 in 2014, actions such as issuing,

providing and using illegal means of payment (Bitcoin and other cryptocurrencies)

will be severely punished administratively from 150 million to 200 million VND

1.1.4.2 Anonymity

Everyone who participates in crypto transactions does not need to provide

personal information, this is a feature of Blockchain platforms This is Crypto’s

double-edged nature

Anonymous transactions will bring both quite clear benefits and harms For

cryptocurrency advocates, this anonymity creates a more equitable market Trading

activities will be recorded publicly on the Blockchain, which will allow traders to

judge others based on their trading proficiency, not their identity or CV.

However, anonymity offers a very convenient means of violating the law The

intractability of Crypto makes it a means of payment and transactions for criminalorganizations A typical example is the case of the website "Dark Scandals" in the

Netherlands This is a website that posts illegal content such as rape and pedophilia

and the price to view this content is 200 Euro in crypto and to avoid being tracked by

the authorities, this money is transferred Exchange across more than 50 different exchanges The website's owner, Michael Mohammad, earned more than 115,000

Euros through this action and was sentenced to 10 years in prison after being

denounced by a victim The payments were difficult to detect by being made through cryptocurrency and across multiple exchanges, and it took the cooperation of

exchanges like Binance to help find Michael

Another problem that also comes with anonymity is the problem of money laundering in cryptocurrencies In the history of cryptocurrency, the Bitfinex

exchange's money laundering case when the founding couple hacked 120,000 BTC,

or nearly a billion dollars The couple Ilya Lichtenstein and Heather Morgan

successfully laundered 25,000 BTC before being arrested and the remaining BTC was seized by the US Department of Justice.

Anonymity can be said to be the most characteristic feature of Crypto It both

brings benefits and creates vulnerabilities for criminals to take advantage of and harm traders through Scam.

1.1.4.3 Digitizing money

Crypto is a special type of asset as it is completely digitized on the Internet and

its transaction activities are only carried out on the Internet network Investors and

traders cannot directly hold and use it like regular cash Not only currencies but also products traded on the Blockchain platform are completely digitized similar to

Crypto

A quite special product related to Crypto is Non-Fungible Token, also known

as NFT As its name suggests, NFTs are non-fungible and represent a unique asset.

NFTs can be images, videos, sounds, and other forms that turn into a digitized asset

on a certain Blockchain, and this makes NFTs original and easy to verify ownership

What has made NFT quite popular in recent years is its uses NFTs can be both

collectible like a painting, and can also be an investment asset and a utility tool

integrated into the game Evidence for collection can be clearly seen in the series of NFTs named Bored Ape Yacht Club, NFT number #8817 has been traded for more

than 3.4 million USD and a series of NFTs of the same set are also for sale for millions

of dollars In addition, the most expensive NFT in the world - "The Merge" is worth

up to 91.8 million dollars, on par with the most expensive paintings in the world

1.2 Time of appearance and history up to now, some outstanding

cryptocurrency

1.2.1 Process of formation and development

To talk about the origin of Crypto, we must first mention the formation of

Blockchain technology Blockchain was invented 32 years ago in 1991 by Stuart Haber and W Scott Stornetta However, the history of Blockchain really became

relevant thanks to a character who created Bitcoin in 2008 named Satoshi Nakamoto

Many people still mistakenly believe that Blockchain and Bitcoin are the same and just have different names However, that is not the case because Blockchain is

the underlying technology that powers applications and Bitcoin is a cryptocurrency

Bitcoin is the first application of Blockchain technology, which makes many people

misunderstand two things During the 5-year period from 2008 to 2013, the price of

Bitcoin continued to increase and the transaction volume also increased, the price and number of transactions increased thousands of times during this period.

The next big event in the history of formation and development of Crypto, we

must mention the formation of the second largest company named Ethereum (ETH) Vitalik Buterin created Ethereum as a new public Blockchain in 2013 with many

additional functions compared to Bitcoin and the main highlight is the ability to

become a platform for developing other decentralized applications Ethereum officially launched in 2015 and quickly grew to become one of the largest

applications of blockchain technology thanks to ETH's ability to create a trueecosystem.

Starting from 2017, we began to enter the phase of Blockchain applications.

The first famous is probably EOS.IO, launched in 2017 EOS is different from other

types of Blockchain in that its mission is to try to simulate the properties of real

computers including Central Processing Unit and Graphics Processing Unit Its main purpose is to encourage the deployment of decentralized applications through an

autonomous decentralized company

Publication of an essay ——> Publication of "Bitcoin: ——y =a Creation of "genesis

presenting an idea of ‘A Peer-to-Peer Electronic block" of BTC

digital currency Cash System" manifesto

1998 A 2008 œs=¬ 2009

2010 20011 _¬5 2013

B rst commercial Bitcoin price reaches nl fl Big fluctuations in price transaction using B it's first noticeable of BTC after which

| it’s demise

03/2017 08.2017 11.2021

B ) Price of 1 BTC PBTC network is BTC reaches new

surpasses the price divided into Bitcoin 8 ATH of 60.000 USD.

of one ounce of gold and Bitcoin Cash

Figure 1.1: The history of formation and operation of Bitcoin

In recent years, new projects have mainly focused on solving the shortcomings

of Bitcoin and Ethereum combined with providing features that take advantage of

Blockchain's capabilities NEO, is billed as an open source platform and the first blockchain to launch in China Although China has banned cryptocurrencies, NEO

remains active when it comes to Blockchain innovation, and is considered the “ETH”

of China In addition, blockchain-related applications are also making waves around

the world We can mention Web 3.0 - The Internet is decentralized, not centralized