Speaking to the National Assembly on June 8, Governor of the State Bank of Vietnam Nguyen Thi Hong said that electronic money and virtual money are issues of great public interest. These concepts need to be clarified.

According to the governor, electronic money is an expression of legal currency, or currency issued by the central bank. When a person has paper money and coins but does not hold it and stores it in electronic form in mobile devices, computer networks, that is electronic money.

"Electronic currencies have a 1:1 ratio with legal currency," said the Governor of the State Bank.

The State Bank has issued circulars and regulations on e-wallets. These are actually cryptocurrency regulations. The State Bank is drafting Decree 101 on Non-Cash Payments and will clarify this concept further.

“In fact, there is the concept of virtual money and virtual assets that we often talk about, like Bitcoin. This is not a fiat currency issued by central banks, but created by organizations in the private sector on the basis of computer network algorithms,” said Ms. Hong.

She said that virtual currencies such as Bitcoin are only recognized in certain communities, such as the gaming community or the technology floor.

Each country in the world has a different way of managing this issue. Some countries consider virtual currencies and virtual assets as assets that are taxed and licensed for trading.

In Vietnam, the Government has assigned the State Bank of Vietnam and relevant agencies to study and develop the legal corridor for virtual currencies.

Should Bitcoin be called “digital money” or “virtual money”?

Dr. David (Duc) Tran, Associate Professor of Computer Science and Director of the Research Laboratory for Network Computing of the University of Massachusetts (USA), who is also a Research Professor at Vin University and a collaborator on Blockchain at the Institute for Advanced Study in Mathematics (Vietnam), said that Blockchain is usually called virtual money but this is not fully accurate.

According to him, the definition of electronic money, virtual currency and digital currency given by the Governor of the State Bank of Vietnam at the recent National Assembly session is not suitable. He said that the aforementioned currencies are all electronic currencies.

“Bitcoin or Central Bank Digital Currency (CBDC) is also an electronic currency, but it is a digital electronic currency, so both are digital currencies. Therefore, the definition of the State Bank of Vietnam calling CBDC a digital currency, while Bitcoin is a virtual currency is not correct,” he said.

He said Bitcoin is the first and most popular digital currency application in the world. Later, when the central banks saw the good aspects of digital currency and the danger of the popularity of Bitcoin affecting their national finances, then CBDC was noticed. Therefore, this expert believes that the definition given by the State Bank of Vietnam is not good in either logic or technique.

He said that all types of money such as virtual money, electronic money and digital money are electronic money. In particular, fiat money used in e-wallet-type applications should be called "fiat electronic money". Bitcoin is called "digital currency" and stablecoin is  called "stable cryptocurrency".

As for the case of CBDC, he suggested calling this "central digital currency" to make it easy to distinguish. For the digital currency issued by the State Bank of Vietnam, the expert said this should be called "VND digital money".

Trong Dat