The Prime Minister has signed a directive that will lead to stronger measures to regulate the use of Bitcoin and other digital currencies amid concerns that they could pose risks to the stability of financial markets and result in losses for traders.

Under the directive, credit institutions shall not be permitted to transact using digital currencies and must swiftly report any questionable or suspicious activities. Public companies, brokerages, fund management companies and investment funds are prohibited from any illegal activities related to digital currencies and are required to comply with the anti-money laundering rules.

Authorities are to also restrict the import of cryptocurrency coin mining hardware and expand their efforts to prevent fraudulent activities concerning digital currencies. The Ministry of Justice is currently developing a legal framework regarding the regulation of digital currencies and virtual assets.

The directive stated that digital currency investment activities, especially the use of digital currencies to mobilize funds under Ponzi schemes, are developing in a complicated fashion and could affect financial stability, Nhan Dan (People) newspaper reported.

Following the directive signing, the Vietnamese Government published Letter No. 2768 / VPCP-KTTH to provide directions for the Ministry of Finance, Information and Communication as well as the State Bank of Vietnam to follow.

In addition, the Hanoi Department of Industry and Trade also announced that document No. 1638 / SCT-QLTM has been sent to “organizations and individuals directly or indirectly related to e-commerce business in Hanoi [to] not use bitcoin and other virtual currencies (cryptocurrencies) to settle e-commerce transactions online.” Where violations are found, these violations “shall be strictly dealt with according to the provisions of the law.” The statement from the Department of Industry and Trade reads:

The Department of Industry and Trade requires organizations and individuals who are directly or indirectly involved in e-commerce business in Hanoi to strictly abide by the above-mentioned regulations and do not use bitcoin and other virtual currencies….in payment of e-commerce transactions, online purchases and sales, [and] payment [of] online services in contravention of Vietnamese law.

Citing provisions of the government’s Decree No. 101/2012 / ND-CP on non-cash payment instruments, the document reiterates, “bitcoin and other similar virtual currencies are not legal means of payment in Vietnam; The issuance, supply, use of bitcoin and similar virtual currency is prohibited in Vietnam.”

Violations are subject to a “fine of between VND 150,000,000 [~US$6,608] and 200,000,000 [~$8,810] for individuals and for organizations with two times the fine level for personal,” the document emphasizes. Furthermore, as of January this year, issuing and using cryptocurrencies “may be subject to criminal prosecution.”