Vietnam leads globally in cryptocurrency adoption

Vietnam gets a perfect score, topping the rankings of the global crypto adoption index, despite the bleak market.

Chainalysis, a blockchain market analysis company (USA), has just released a report on the Global Cryptocurrency Acceptance Index (GCAI) 2022. Data compiled and ranked from 145 countries and territories, in which Vietnam is awarded 1 point (absolute score). Second is the Philippines with 0.75 points. The next three positions are Ukraine with 0.69 points, India with 0.66 points and the US with 0.65 points. China got 0.53 points, ranked 10th.

This is the third year that Chainalysis has made the listing for cryptocurrencies. In the first year, Vietnam ranked 10th, then suddenly jumped to number one and continued to maintain the championship this year. According to Chainalysis, the above figures show the large purchasing power of the Vietnamese market in the field of cryptocurrencies and the high acceptance of people about decentralized digital currency tools, DeFi, P2P.

According to the Crypto Adoption Index, Vietnam ranked #1, with an score of 1.0 out of 1.0. For comparison, neighbouring countries like Thailand and China had scores of ~0.16 (ranked 12), and United States had a score of 0.22 (rank 8). In second place was India with a score of 0.37.

Despite having the 53rd largest economy based on gross domestic product, Vietnam placed 13th in realized Bitcoin gains for 2020, according to Cointelegraph.

Global Surveys of Crypto Usage

Although chain-analyses are considered more insightful than surveys, it is nonetheless interesting that an independent survey corroborated the Chainalysis conclusion. Finder conducted a survey of 42,000 people in 27 countries, the result being that 41% of Vietnamese have purchased cryptocurrency. "Remittance payments may have played a significant role in these numbers, with cryptocurrency an option for migrants who want to send money home and avoid exchange fees," the report stated. This ranks Vietnam #1 among surveyed countries.

The report states: “Vietnam also tops the list for Bitcoin ownership. In Vietnam, Bitcoin is the most popular coin to own (20%), followed by Bitcoin Cash (7%), Ripple (5%) and Ethereum (5%).”

As for why cryptocurrencies are so popular in Vietnam, the report claims that remittances top the list of reasons (although, we have our own explanations ).

Some other statistics also show similar results about Vietnamese people’s interest in cryptocurrencies. A poll from 2020 by Statista showed that 21% of Vietnamese surveyed said they knew or used cryptocurrencies.

According to experts, one of the reasons why the cryptocurrency adoption index in Vietnam is so high is that Vietnamese people grasp the world’s new trends very quickly. The highest grossing P2E (play for money) game in the world Axie Infinity issued by the Vietnamese. New trends such as M2E (running for money) also quickly blossomed and were well received by many Vietnamese.

Vietnam is also one of the first countries in the world with a legitimate Blockchain Association. During his visit to Vietnam in June, billionaire Changpeng Zhao (CZ), founder of Binance, repeatedly affirmed that Vietnam is a pioneer in the blockchain field.

“The potential of the Vietnamese blockchain industry is huge, there are many passionate and knowledgeable employees about technology. After interacting with the Vietnamese technology community, I see that they are very creative, many people are inspired. interested in new technologies such as blockchain. Vietnam is a potential market for Asia in this area,” said CZ.

Based on the World Bank’s clustering list, Chainalysis indicates that people in low-middle-income countries are more accepting of cryptocurrencies. “In the coming years, it will be interesting to see what solutions the crypto industry can build to drive greater adoption by high-income economies,” Chainalysis reports.

Top Reasons Why Vietnam Ranks #1 For Crypto Adoption

Getting reliable data on why Vietnam is so popular is difficult. Based on our discussions with crypto-users in Vietnam, we have heard the following reasons (which we detail more in a companion article):

  • There is limited access to traditional investment vehicles and asset-classes in Vietnam.
  • Vietnam has a large under-banked population (nearly 70% of Vietnamese are estimated to lack a bank account; source) and ATMs are rare in rural areas.
  • Almost all older Vietnamese use to trade and hoard gold, but not the younger generation.
  • Crypto presents an venue for getting money out of Vietnam and out of the Vietnamese dong, which has historically suffered large devaluations.
  • Historical experiences with government-sanctioned collectivization of private property.
  • Global remittances, with large expat communities and migrant-worker communities in the USA, Europe, Australia, Canada, Korea and elsewhere.

What is conspicuously missing in the above reasons is buying and selling goods via cryptocurrencies. Some gift-card platforms exist which accept crypto, but, on the street-level, there is very little evidence that Vietnamese are using crypto day-to-day for buying and selling goods.

In fact, physical cash is still the #1 way people transact in Vietnam, with digital payments and credit-cards still relatively rare (although they are growing rapidly among the younger urban population).

Is Bitcoin Legal in Vietnam?

Like many countries, the legality of cryptocurrencies in Vietnam is murky and evolving. The most significant legal decision was in July 2017 (Letter No. 5747/NHNN-PC) which prohibited the use of cryptocurrency for payments as well as prohibited the issuance of new cryptocurrencies (e.g,. ICOs). [source]

Later, under Directive No. 10/CT-TTg, financial institutions and agencies were directed to control and “prevent” cryptocurrency transactions.

These decisions were interpreted by many Vietnamese as leaving the door open for cryptocurrencies to be used for speculation and investment. However, the official legality of cryptocurrencies for cross-border remittances and/or speculation remains unclear.

Recently, in June 2021, there was formal approval of an “e-government” strategy for 2021-2025 (Decision No. 942/QD-TTg), which may be similar to the e-Government strategy of Estonia. Overtly, this has nothing to do with cryptocurrencies, but there is speculation that the 942-strategy will include a digital-ledger/blockchain strategy as well.

Source: Synthesis