Saigon cafés, restaurants facing the heat for accepting Bitcoin payments

Authorities in Ho Chi Minh City will be working with the country's central bank to “handle violations” at several restaurants and coffee shops in the city that have been accepting Bitcoin as payment, an official from the bank said on Tuesday.

Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City branch, maintained that virtual currencies such as Bitcoin are illegal, and the issuance, provision and use of Bitcoin violates the rules.

Several coffee shops and restaurants in the city have been accepting Bitcoin as payment so the municipal administration has agreed to cooperate with the central bank to deal with these violations, Minh told a meeting with the central bank’s deputy governor Dao Minh Tu.

“We have also asked the city’s police department to work with us.”

The heaviest punishment for using cryptocurrencies in Vietnam is a fine of VND200 million ($8,800).

However, VnExpress found a restaurant in District 1 that allows customers to pay for their drinks and pizzas using Bitcoin.

A staff there said customers only need a Bitcoin code to pay for their meals, adding that this method is more beneficial for the restaurant because Bitcoin payments do not appear on tax declarations.

Prices at the restaurant follow the current value of Bitcoin on the world market, which was $16,500 on Wednesday.

The value of the cryptocurrency has been rising rapidly this year, reaching an all-time high of $19,783 on Sunday, an increase of 20 times compared to January.

The heat that Bitcoin has created globally has been felt in Vietnam, and 1,478 pieces of hardware were imported into the country to "mine" for the currency in the first ten months of this year, according to official government data.

As explained by Business Insider and Investopedia, the process of mining Bitcoins involves miners solving complex mathematical problems, and the reward is more Bitcoins generated and awarded to them.

The participant who solves the puzzle first gets to place the next block on the block chain, a public ledger that records all Bitcoin transactions, eliminating the need for a third party to process payments, and claim the rewards.

Miners verify transactions and prevent fraud, so more miners equals faster, more reliable and more secure transactions. According to current Bitcoin protocol, 21 million coins is the cap and no more will be mined after that number has been reached.

Yet as currently regulated, the hardware imported into Vietnam for Bitcoin mining is not prohibited.

In October, the central bank issued a statement saying that "from January 1, 2018, the act of issuing, supplying or using illegal means of payment may be subject to prosecution in accordance with the provisions of Article 206 of the Penal Code 2015."

The only payment methods allowed in the country are issued or controlled by the State Bank.

The central bank has warned organizations and individuals in Vietnam not to invest in Bitcoins or conduct transactions in the currency, saying they would be taking a huge risk with no legal protection.

“Bitcoin transactions are anonymous and can be used for money laundering, drug trafficking, tax evasion and illegal payments,” the bank said.

Also in October, Vietnam’s top technology university FPT said it was looking at ways to let its students pay their tuition fees using Bitcoin.