In Vietnam, despite the absence of an official legal framework, digital currency transactions are estimated to reach approximately US$100 billion annually, involving more than 27 million accounts. This substantial activity underscores strong public demand and emphasizes the urgent need for a clear, adaptable, and well-structured legal framework to effectively govern the digital asset sector.
Many opportunities coupled with different risks
Currently, digital assets in Vietnam exist within an unclear legal framework. This situation has led to many activities related to cryptocurrency assets, including digital currencies, taking place on foreign exchanges, resulting in lost tax revenue, difficulties in controlling capital flows, and issues related to money laundering and terrorism financing. Additionally, individual investors are left unprotected against risks such as fraud and price manipulation.
In March, the Ministry of Finance presented a draft resolution to the Government regarding the pilot implementation of issuing and trading cryptocurrency assets. According to the Ministry of Finance, the cryptocurrency market is rapidly developing, offering opportunities but also posing significant risks. The implementation of a controlled sandbox mechanism will enable regulatory agencies to monitor and assess the practical operations of the market before official application, allowing Vietnam to leverage the potential of cryptocurrency assets to raise capital for production and business, develop the digital economy, while also minimizing risks such as money laundering, terrorism financing, and other illegal financial activities.
The Ministry of Finance emphasizes that a significant issue at hand is the tax policy concerning digital assets. Accordingly, the current legal framework provides a basis for taxing various goods and services, including the business activities related to digital assets. However, due to the absence of specific regulations for classifying and determining the nature of cryptocurrency assets, the implementation of tax policies remains fraught with challenges.
Therefore, if specialized laws clearly define cryptocurrency as a type of legal good or asset, related transactions will be subject to tax obligations as per existing regulations.
At a recent seminar on digital currency held in Ho Chi Minh City, Director Truong Minh Huy Vu of the Ho Chi Minh City Institute for Development Research stated that although there is no clear legal framework, the scale of digital currency transactions among Vietnamese individuals is substantial, estimated at up to $100 billion per year with around 27 million accounts participating. This indicates a significant demand that exists in a legal 'gray area,' leading to most profit-generating activities and costs associated with cryptocurrency assets being conducted abroad, in places like Singapore, the USA, and Hong Kong (China).
As a result, Vietnamese investors in digital currency face considerable risks. This reality underscores the urgent need to develop the cryptocurrency market and to pilot the establishment of a legal framework that adheres to the principles of sustainable development and consumer protection, thereby mitigating the risk of fraud.
Legal framework ensures sustainable market development
The Vietnam Blockchain Association emphasizes that establishing a legal framework not only aids in risk management but also facilitates the official contribution of capital from cryptocurrency assets to the economy. With transaction volumes in the cryptocurrency market exceeding $100 billion annually, it indicates the emergence of opportunities within an international playing field. If managed and utilized effectively, the digital asset market could generate hundreds of millions of US dollars in tax revenue each year, while also stimulating other sectors such as tourism and e-commerce.
In addition, it could mitigate social consequences arising from uncontrolled investment activities. Investors will have the chance to experience and understand what constitutes an officially recognized transaction, while also being protected within the legal framework established by the state.
Dr. Huynh Thanh Dien, an economic expert, also points out that the legal gap has turned the digital asset market in Vietnam into a "tax haven," despite the inherent risks. Due to the lack of stringent regulation and taxation on transactions, this market has attracted a large number of participants who own and trade assets. Therefore, the demand for a legal framework has become urgent. However, it is even more crucial that this legal framework ensures sustainable market development, curbs speculation, and encourages investment to create a solid foundation for the economy.
The economic expert emphasized that the goal of establishing a legal framework is to facilitate genuine business activities in capital mobilization, particularly by directing capital flows into promising investment sectors such as high technology and innovation. Market participants must comply with regulations on registration, identity verification, anti-money laundering, counter-terrorism financing, and investor protection.
He added that tax policy should aim to impose higher taxes on speculative capital (short-term crypto investments) while offering tax incentives for genuine investors (such as in Security Token Offerings—STOs) and supporting businesses that develop asset-backed security tokens. Combining these two elements will promote the sustainable development of the digital asset market, curb speculation, and encourage investment in sectors that form a solid foundation for the economy.
Meanwhile, Dr. Can Van Luc, a member of the National Financial - Monetary Policy Advisory Council, believes that researching and implementing national digital currency management is crucial. However, to effectively manage digital currency, it needs to be based on several principles:
- The legal framework must align with the Party's and State's directives, aiming to foster and promote development while simultaneously controlling risks.
- It's essential to remove immediate barriers while maintaining a long-term vision to ensure policy sustainability and avoid imposing cost burdens on businesses and individuals.
- The framework must anticipate major global trends, especially changes related to science and technology, digital transformation, the digital economy, and digital assets.
- It must ensure feasibility, effectiveness, and efficiency.
- Finally, it must comply with international commitments and Vietnam's current legal system.
