Vietnam is a country with a huge amount of potential and over recent years, has attracted the interest of both seasoned and inexperienced individuals keen to explore new markets. Forex trading conferences have been held in places like Thailand, Malaysia, Philippines, Singapore and with Vietnam being recently added to that list, its clear that there is a demand. Celebrities are endorsingForex trading and suggesting that places like Malaysia and Vietnam could be potentially untouched goldmines for the right people. But all of this begs the question – is Forex trading in Vietnam legal?
Forex trading in Vietnam is not legal. Vietnamese authorities have not issued any licenses to traders or brokers, making the industry completely illegal and fines will be issued to those caught trading. However, brokers based in other countries do allow forex traders from Vietnam, giving traders an opportunity to trade.
Forex Trading In Vietnam – The Law
Forex trading in Vietnam is a bit of a grey area. It’s not regulated and the Vietnamese authorities don’t plan on regulating it any time soon. For this reason, there are not any forex brokers legally operating within the country. However, this doesn’t mean that traders from Vietnam cannot trade forex.
You can still legally trade forex within Vietnam, you just need to be using a broker based outside of the country. Many of the largest brokers accept traders from Vietnam. You will also have access to all unregulated brokers and offshore brokers, offering 1:500 leverage and usually accepting very small minimum deposits. I would advise being very cautious using any unregulated brokers, however.
Whereas some countries ban the use of external currency pairs, as forex isn’t regulated at all within the country, you’re free to trade which forex currency pairs you would like. This gives traders a huge amount of options to work with!
Getting Funding As A Forex Trader In Vietnam
As forex isn’t regulated within the country, you cannot get funding from any prop firm based within the country. In fact, there isn’t a single forex prop firm based within the country. However, the majority of online prop firms will allow traders from Vietnam! This means you have a huge amount of options for getting funded at your disposal.
I’d highly recommend going down the online prop firm funding route and choosing one of the firms highly ranked on our top forex prop firms list. I’d personally recommend a company with worldwide coverage like MyForexFunds or FTMO.
Tax For Forex Traders In Vietnam
When it comes to paying tax, we would advise you to seek the advise of a tax specialist or accountant within your country. Tax is a very tricky subject in forex and usually is handled differently in different countries. However, it’s worth knowing that income from forex trading needs to be taxed in all jurisdictions.
Why Is Forex Trading Booming In Vietnam?
Companies like Coolcat have gone under after promising returns from 1.3 VND (£40) to over 9.3 million VND (£300) a day which is twice the average anual income of a single individual in Vietnam. Broker experts at SSI Security Corporation have explained that a bonus of 20-40% of the ‘guaranteed’ profits has clouded peoples judgements and created an unrealistic expectations for many first time investors who are looking for an easy way to build capital. That combined with a lack of experience, knowledge and awareness of the industries potential unpredictability prevents them from making successful, informed decisions and instead causes them to lose vast amounts of money with no way to regain it.
The only way to overcome this as, as any seasoned investor knows, is with a high financial leverage, but this isn’t something that people often have when they are looking for quick, high reward opportunities.
Choosing A Forex Broker In Vietnam
With forex not being regulated within the country, you will need to be using either a broker based in another country, or an offshore broker. Either way, this leads to a huge amount of options and opportunity for traders.
Many forex traders in Vietnam are choosing to go with offshore brokers that accept bitcoin withdrawals and deposits. I think personally that this is very risky and with many regulated brokers accepting traders from Vietnam, I think it isn’t worth the risk.
Top Rated Forex Brokers has a great list of brokers accepting forex traders from Vietnam, so I’d recommend checking that out. I’ve personally used IC Markets for many years and they have been a great broker. With small spreads, quick withdrawals, 24/7 support and catering to all languages, it’s a great broker to work with if you are struggling to decide!
Why Is Forex Trading Illegal In Vietnam?
In 2020, the US treasury department added Vietnam, along with some other major players like Switzerland, to their watchlists saying that they are manipulating their currency and actively attempting to devalue their own currencies against the dollar. They have since argued back saying that Vietnams currency reserves are extremely low compared to other countries in the same region and that their intervention is actually an attempt to increase monetary security and national finance.
However the State Bank of Vietnam earlier this year told various local banks that it was planning to stop buying US dollars over a period of days and instead, would agree to buy the dollars at a more favourable rate over a period of months and would allow the bank to cancel any agreements a few weeks before they were due to happen.
This would reduce the value of the VND, but would prevent the transactions happening immediately and so would stop them being flagged up with the US and causing any further friction. Any further intervention could cause tariffs to be issued on their goods which would disrupt and put more pressure on an already struggling economy. With this in mind, many people are still trying to find ways to trade in Vietnam and it not uncommon for people to use offshore brokers to get around the SSC (State securities commission of Vietnam) and therefore, despite the country consistently stating that is has no self interest, there is the question of how
much of a benefit would it be for vietnam to issues licenses.
If Forex Is Illegal In Vietnam, What Are The Alternatives?
With the Vietnamese government focusing on recovering its economy after COVID as every country is, the stock market has become a very positively received plan B for many investors who have struggled with the morality and legality of trading in vietnam. The stock market has the reputation of being one of the most flexible channels for investment as was very close to being added to the FTSE Russell’s Watchlists as it had the potential to be upgraded to the secondary emerging market back at the end of 2018, but missed out by two criteria. Experts as SSI Securities Corporated have said that ‘it is entirely feasible for investors to achieve a profit rate of 30-120% per year in the stock market’ As a result, many investors who are on the fence are choosing more reliable, well regulated lower risk options like the stock market.
What Are The Issues In Using Unregulated Forex Services In Vietnam?
There have been hundreds of documented investors who have been turned into debtors not by the change in rates, but by the lack of law that they can rely on. By trading without substantial legislation, it doesn’t only massively increase the risk of return if you include the fine, but it means that forex brokers don’t have to honour their contracts with investors and they can essentially promise whatever like and not have to deliver on it. They don’t have to have enough funds to cover their clients investments and so can continue to take on new investors money in order to pay of previous investors which creates a downward spiral. And they don’t have to disclose any potential risks which allows them to promise ridiculous rates that result in disappointment and a return of 0.
With business becoming more unpredicatable over the last few years due to COVID, a guaranteed profit of 20-30% is a realistic maximum return that most investors can expect to make within a year. The hundreds of percent a year that non regulated Vietnamese’s traders are offering is attracting the attention of thousands of individuals who continue to heavily involve themselves in trading despite knowing the legalities.
In Conclusion – Is Forex Trading Legal In Vietnam?
In short, forex trading in Vietnam is possible. It’s not regulated or endorsed by the Vietnamese authorities, however, many brokers around the world will accept forex traders from Vietnam and allow them to trade. The Vietnamese government has not issued any licenses for brokers to operate within the country, so there is no regulation.
If you have any further questions or experience trading forex from Vietnam please let us know in the comments below.