The Collapse of FTX and Vietnam’s Crypto Market: What’s next?

Cryptocurrency has proven incredibly popular in Vietnam. But interest was already subsiding when, two weeks ago, major crypto exchange FTX collapsed. Could this be the beginning of the end for Vietnam’s crypto market?


A Facebook post in October showed a young Vietnamese man on the side of a Ho Chi Minh City street selling graphics processing units (GPU) by the kilo. GPUs are a key component of crypto-mining units, sales of which boomed in September of last year when crypto markets were at a peak.

The joke was that cryptocurrencies had devalued to the point that GPUs could be purchased as easily and as cheaply as fruit and vegetables on the side of the road.

Indeed, Vietnam, which has consistently topped a number of crypto-adoption indexes, was losing interest in cryptocurrencies.

And that was before FTX collapsed.


In the days after FTX put a stop to withdrawals, the official Vietnamese telegram group of the now defunct exchange was filled with comments from frustrated investors that had reportedly lost thousands of dollars.

But the impact was not necessarily isolated to an unlucky few. The collapse of FTX, more broadly, had cast a shadow over the industry as a whole.

“Crypto is a risky investment,” Huan Huu Nguyen, a professor at the University of Economics HCMC told local press. “And the crash of the FTX exchange shattered investors’ trust and confidence in the crypto market.”

But does this spell the end of Vietnam’s love affair with crypto? Or is this just a small bump on the road to eternal crypto-bliss?

Why has crypto proven so popular in Vietnam?

Whereas in developed economies cryptocurrencies have largely been seen as investment vehicles similar to stocks, in emerging economies like Vietnam, crypto has played a more practical role.

There are currently 600,000 Vietnamese working overseas in more than 40 countries. Between them, they remit an estimated US$3-3.5 billion every year, according to the Ministry of Labor, Invalids, and Social Welfare.

Whereas historically moving these funds has been costly with fees usually charged by financial institutions at both ends of the transfer, cryptocurrency exchanges have made the process markedly much cheaper.

For example, in the second quarter of 2022, the global average remittance rate was 6.01 percent. For comparison, in October of 2020, Bitcoin worth US$1.1 billion was moved from one crypto wallet to another for just US$3.58.

But it’s not just remittances, hype has been a big part of crypto’s popularity too.

In the heady days of the pandemic in 2021, Vietnamese digital media was filled with crypto currency success stories, with one tale in particular sparking vast volumes of coverage from all around the world.

Axie Infinity, based in Ho Chi Minh City, a game that awarded players with crypto tokens, reached a valuation of US$3 billion. This was a huge point of pride in Vietnam and heralded a mad rush into the crypto sector.

On top of that, gambling, which is illegal in Vietnam, may also have contributed to the crypto boom. This, coupled with relatively low financial literacy, may have attracted many Vietnamese to the high-risk, high-reward cryptocurrency sector, according to Binh Nguyen, the Fintech-crypto Hub Coordinator at RMIT Vietnam.

Cryptocurrency is not legal in Vietnam

Despite its popularity, however, cryptocurrency is not recognized as either a currency or an asset in Vietnam, yet.

There is no provision for cryptocurrencies in Vietnamese law and the State Bank of Vietnam has been clear about its feelings toward the digital phenomena.

“Virtual currency in general, and Bitcoin and Litecoin in particular, are not currencies and are not legal means of payment according to the provisions of Vietnamese law. Issuing, supplying and using virtual currency in general and Bitcoin, Litecoin in particular… as currency or means of payment is prohibited,” it said in an official dispatch in 2017.

But this might be changing.

Crypto regulation may be coming

The attraction to crypto for Vietnamese investors has not been lost on the government.

In May of 2022, the Vietnam Blockchain Association was officially launched. Established by the Ministry of Home Affairs, with Decision No 343/QD-BNV, it is the first, official, crypto-based legal entity of its kind in Vietnam.

The association’s mandate is to essentially build a framework for the development of the sector alongside creating a network of crypto stakeholders.

(See also: Vietnam Tasks Government Agencies to Prepare Legal Framework for Cryptocurrencies, Virtual Assets)

Furthermore, in October, Prime Minister Pham Minh Chinh called for regulations relating to cryptocurrencies.

“I’m a little worried about virtual currencies because though they haven’t been recognized, people are still trading in them,” he said.

Then, in November, the issue of virtual currencies and assets in money laundering activities made its way to the National Assembly floor. It has been suggested that amendments should be made to the law to cover virtual assets.

Though specific details are somewhat scant, this does mark significant headway toward regulating the sector.

The future of Vietnam’s crypto market

Vietnam has been a world leader in crypto adoption and the industry has flourished in the socialist republic.

But things were already changing before the collapse of FTX.

Interest in crypto-trading was already waning and the government was already considering regulatory amendments.

In this context – the FTX fiasco could either be another nail in the Vietnamese crypto’s coffin or spur the government to move faster on crypto regulation and legitimization of the industry.

(See also: Google Wallet’s Arrival Highlights Fertile Fintech Sector in Vietnam)


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