There are many issues that regulators are still trying to figure out when it comes to cryptocurrencies. In fact, not all countries are pro-crypto mining. For one, it could be due to the massive electrical requirement of crypto mining gear. In addition to this, it can also be due to the environmental impact that it can create along the way.
In fact, Venezuela, for instance, had a change of heart with their stance on crypto mining banning importation of crypto-related hardware. It is due to the fact that Venezuelans would rather use cryptos than the Bolivar because of hyperinflation.
Now, you have Vietnam that is doing the same steps. Vietnam’s Ministry of Finance (MoF) has now proposed a sweeping through a temporary ban on crypto mining hardware. And unlike Venezuela, the Vietnamese government has a different reason for such.
Due to a Scam?
The move was actually triggered by a scam that involved 32,000 investors and an amount is estimated at $600,000. The “cryptocurrency startups” conducted a multi-level marketing scheme. It involved Pincoin and Ifan that claim to be operating in Dubai and Singapore. The two companies were able to launch their ICO via Modern Tech which is a Ho Chi Minh-based company that is said to be the authorized local representative for both ICOs.
Pincoin claims that it is an Ethereum standard ERC-20 token. It promised to provide returns of up to 40% every month on its site. It even included a picture of a Lamborghini.
The trouble started when Modern Tech stopped paying commissions. Instead of being paid in Vietnamese dong, which is the country’s local currency, Modern Tech started providing tokens that are redeemable by cash. When investors tried to demand compensation from Modern Tech, that’s when the problem started.
The owner of the building where Modern Tech rents mentioned that the company “already left and annulled its contract” in March. He also added that “No one knows where they are moving now”.
Stricter Rules on Crypto
And because of this, there has been a drawback to the entire crypto industry. Vietnam’s Prime Minister has published a directive that ordered State Bank of Vietnam, the Ministry of Public Securities and other regulatory bodies to become strict when it comes to handling “activities related to Bitcoin and other cryptocurrencies”.
In addition to this, there were six government ministries that were ordered by deputy prime minister Vuong Dinh Hue to “quickly consider and take down” the scam.
This isn’t exactly helping Vietnam’s crypto industry to prosper. In 2017, Vietnam was reported to be preparing to legalize the use of digital currencies such as Bitcoin. That is despite the move by the central bank to prohibit the use of Bitcoin as a legal tender.
Growing Mining Industry
The crypto mining industry in Vietnam is growing. There were around 9,300 mining rigs that were imported into the country in 2017. And as of April 2018, there were already around 6,300 crypto mining rigs that were imported in the country.
Scams are prevalent when it comes to ICOs. In fact, it is even possible that one in every five ICOs can be considered a scam. But is this a good move by the Vietnamese authorities to shut down the influx of mining hardware?