Vietnam bans banks from handling Bitcoin

Vietnam has banned its banks from handling Bitcoins, saying the virtual currency is not legal tender in the communist nation. Bitcoin, invented in the wake of the global financial crisis, is a form of cryptography-based e-money that offers a largely anonymous payment system, but its value is highly volatile. “The ownership, trading and use of Bitcoin and other virtual money as an asset carries potential risks for users,” the State Bank of Vietnam said in a statement late yesterday.

Vietnam has become the latest government to rule that Bitcoin is not a legal currency and therefore isn’t lawfully recognized or protected, warning its citizens not to use or invest in the virtual currency, the Associated Press reports. In a statement, Vietnam’s central bank notes that there has been an increase in Bitcoin activity recently. In response to that, it says Bitcoin is harmful as it is linked to criminal activities such as money laundering, drug trafficking and tax evasion among others. It also says that Bitcoin trading poses a lot of risks — citing the fluctuation in its value ever since exchange Mt. Gox went offline amid insolvency rumors. Due to the volatility of Bitcoin, Vietnam’s central bank notes that it could potentially be damaging for investors as well.