Vietnam”s cryptocurrency landscape is currently in turmoil, experiencing a dramatic downturn that has led to significant financial losses for investors, widespread layoffs, and numerous bankruptcies. This severe “crypto winter” marks a stark contrast to the previous boom that positioned the country as a leader in crypto adoption.
In Hanoi, first-year computer science student Hoang Le recounts his experience with trading cryptocurrencies from his university dorm. His digital assets once peaked at $200,000, a striking sum compared to Vietnam”s average annual income, but they have since plummeted to zero. Reflecting on his experience, Le stated, “When profits were high, everyone became greedy,” acknowledging that the rapid rise in values was too good to last. He now regards his losses as “tuition fees” paid for valuable lessons in the volatile market.
Unlike its neighbor China, which has imposed a complete ban on cryptocurrencies, Vietnam has allowed blockchain technology to develop within a legal gray area. The government has restricted the use of cryptocurrencies for payments while permitting speculative trading, resulting in an estimated 17 million people owning digital assets, as reported by Chainalysis.
However, the formerly advantageous position has now become a burden as the crypto market grapples with a prolonged downturn. Bitcoin”s price has nearly halved from its peak above $126,000 in October, with many alternative tokens experiencing even steeper declines. According to Tran Xuan Tien, head of Ho Chi Minh City”s blockchain association, “Many companies have shut down because of this crisis.” The industry is now facing an influx of bankruptcies and significant layoffs.
Nguyen The Vinh, co-founder of the blockchain firm Ninety Eight, has confirmed that his company has reduced its workforce by nearly one-third since last year, with further restructuring expected due to the bleak market outlook. “The market will likely remain difficult for years, not just months, so we need backup plans,” Vinh expressed, underscoring the challenging environment ahead.
The once unregulated and speculative nature of Vietnam”s crypto scene has led to various scams and high-risk ventures. The government has intervened to dismantle significant fraud schemes, including one that allegedly defrauded investors of nearly $400 million. Despite these challenges, the Vietnamese government has not sought to suppress the industry entirely. Instead, under the leadership of To Lam, Vietnam has started to embrace blockchain technology, passing a law last year that recognizes digital currencies and aims to regulate the market more effectively.
Although a five-year pilot program for crypto trading has been announced, regulatory uncertainty remains a significant hurdle for many businesses. Some firms choose to register in jurisdictions like Singapore and Dubai instead of navigating Vietnam”s ambiguous legal landscape. As investor sentiment continues to deteriorate, new crypto startups are finding it increasingly difficult to secure funding. One entrepreneur, known only as Huu, lamented the stark shift in investor perceptions, noting that what was once seen as a pathway to substantial returns has now become fraught with risk.
Despite the grim reality, some industry founders maintain that the current downturn is a natural phase of the business cycle. They express optimism that resilient companies will ultimately emerge, offering more reliable products and services. However, this outlook provides little comfort to the nearly 55% of individual Vietnamese crypto investors who reported losses last year, as the mood in the community remains overwhelmingly pessimistic.
