Vietnam restricts use of Bitcoin

Tags: News
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 late yesterday.

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 the communist country 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 website.

The world's Bitcoin community was shaken Tuesday by the disappearance of its biggest exchange, Japan-based MtGox.

After beginning life worth just a few cents, the currency spiked above $1,000 last year, before slumping below $600 earlier this month, according to the Coindesk index.

In Vietnam, a Bitcoin was trading at roughly six million Vietnamese dong ($300) this week, down from around $1,000 last month, according to VietnamNet.

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

A recent report by the International Institute of Finance said Bitcoin's future as a broadly accepted exchange medium is limited.

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