In a dramatic shift, Vietnam”s burgeoning cryptocurrency landscape is now grappling with severe market contractions. Once thriving, the sector has seen many investors suffer substantial losses amidst a broader market downturn.
Hoang Le, a 23-year-old computer science student from Hanoi, witnessed his digital asset portfolio plummet from a peak value of $200,000 to zero as Bitcoin and other cryptocurrencies crashed. “It hurt a lot,” he remarked, characterizing his financial loss as “tuition fees” for a hard lesson learned in the volatile crypto market.
Vietnam, unlike its neighbor China, has maintained a legal gray area for cryptocurrencies, permitting the development of blockchain technology while prohibiting their use as payment methods. This environment fostered a rapid adoption of digital assets, with approximately 17 million individuals in the country reportedly owning cryptocurrencies, according to Chainalysis.
However, the optimism surrounding this early adoption is fading. The price of Bitcoin has nearly halved since reaching an all-time high of over $126,000 in October, with many altcoins experiencing even steeper declines. The distress is echoed by Tran Xuan Tien, the head of Ho Chi Minh City”s blockchain association, who noted that numerous companies have shut down or scaled back operations due to the crisis.
Nguyen The Vinh, co-founder of blockchain company Ninety Eight, shared that his firm has cut nearly one-third of its workforce as part of necessary restructuring in response to the bleak market outlook. He anticipates further adjustments as the market remains challenging for the foreseeable future.
Previously, Vietnam”s crypto sector resembled a wild west, with speculative ventures and fraudulent schemes coexisting alongside legitimate startups. While the government has intervened against significant scams, it has not stifled the industry, opting instead to provide a platform for local businesses to innovate.
Recent legal developments include a new law recognizing digital currencies, which took effect last month, and a pilot program aimed at facilitating crypto trading for Vietnamese firms. Despite these advancements, regulatory uncertainty persists, hindering many companies from registering locally and prompting them to seek registration in more crypto-friendly regions like Singapore and Dubai.
As many startups struggle to secure funding, the mood among investors has soured. Huu, a budding entrepreneur, expressed concern over the difficulties in attracting investment, contrasting the previous allure of high returns with the current risks of total loss.
The current downturn is seen by some industry leaders as a natural phase of the business cycle, with expectations that stronger entities will emerge from the ashes of this market correction. Nevertheless, the stark reality remains that nearly 55 percent of individual Vietnamese crypto investors reported financial losses last year, contributing to a pervasive sense of gloom within the community.
