The role of the National Data Center
Most digital currencies are built on Blockchain technology. The issuance of digital currencies also follows certain rules to ensure that the amount of currency issued is not too large, as it will cause inflation and devaluation of the currency. Following the directions of the central authorities, the development of a legal framework for digital currencies has become urgent.
According to Mai Hoang Phuoc from the University of Economics and Law (Vietnam National University – Ho Chi Minh City), not recognizing digital currencies as legal assets will lead to consequences such as a lack of investor protection mechanisms, so they may lose everything if they encounter fraudulent exchanges; a lack of legal basis to divide common property and cause difficulties in inheritance. Therefore, identifying digital currencies as assets and building a legal framework is necessary to create a solid legal foundation for the development of the digital currency market in Vietnam in the future.
“To manage and regulate digital currencies, it is necessary to build a unified legal system, a legal framework suitable to the current situation of Vietnam. When digital currencies are considered a type of asset, it will open up mechanisms and legal bases for protecting the ownership rights of digital currency owners, and from the State’s perspective, there will be a basis for managing and collecting taxes related to digital currency transactions”, commented Nguyen Nhat Thanh from HCMC University of Law.
Prof Dr Do Van Dai, Vice President of HCMC University of Law, shared that when recognizing digital currencies as a type of asset, it is extremely necessary to have regulations on asset trading, establishing trading exchanges; and at the same time, have incentives and support for Vietnamese businesses to create “made in Vietnam” digital currencies after having a clear legal framework.
The Ministry of Public Security on March 1 established the National Data Center, where data is the core platform. This Center provides data-related services, supports policy planning, creates development, builds a digital government, digital society and digital economy, while ensuring that national defense and security will be an important driving force to build a new era of prosperity. This center has a very large role in building a digital currency trading exchange.
Sandbox model trading exchange
Nguyen Nhat Thanh believes that to effectively manage digital currencies, Vietnam needs a state-controlled trading exchange, given its novelty and economic impact. A sandbox model is crucial for this, requiring extensive digital data to assess risks and formulate policies. The exchange’s operator must collaborate with the State Bank of Vietnam and the Ministry of Public Security to monitor transactions, preventing money laundering and terrorism financing. This approach ensures timely regulation and safeguards against potential societal disruptions, while fostering a controlled environment for digital currency trading.
Globally, successful sandboxes are government-led, controlling financial risks in digital markets. Sandboxes test innovations with incentives. Experts urge Vietnam to adopt this model, with state agencies developing a sandbox for digital currency exchanges, ensuring controlled and regulated growth.
For the exchange to operate effectively, it also needs to have a national blockchain system with high security, which can be integrated with the financial system and state management, or a decentralized identification system, which helps verify the identity of transaction participants, comply with KYC (Know Your Customer) and anti-money laundering (AML) regulations. Therefore, the exchange’s direct integration with the national data system will better control the legality of digital assets and digital currencies.
Learning from the case of Japan, whose sandbox’s management unit coordinates the population database to implement KYC and control transactions. This model is considered by experts to be suitable for Vietnam to apply and the unit building the digital currency trading exchange needs to have a close connection with the National Data Center, allowing the combination of population data to deploy a strong KYC system, limiting illegal anonymous transactions.
Deputy Minister of Finance Nguyen Duc Chi said that digital currencies are complex, global novelties. Nations worldwide are researching and developing diverse legal frameworks for transparent management, aiming to foster socio-economic growth and stability.
The Prime Minister has, therefore, mandated urgent research and development of a legal framework for digital currency activities in Vietnam. The Ministry of Finance is tasked with delivering a report this March, proposing a resolution to pilot a state-permitted virtual currency exchange. This initiative aims to provide a regulated platform for Vietnamese organizations, individuals, and investors to engage in digital asset trading, fostering a controlled environment for market participation.
The Vietnamese Government intends to safeguard the legitimate rights of all market participants. Future regulations will enable Vietnamese businesses to issue digital assets for capital mobilization, supporting production and business activities. This strategic move aligns with global trends in virtual and digital assets, contributing to national economic growth and ensuring Vietnam remains competitive. Prompt action is deemed essential to prevent Vietnam from falling behind in this rapidly evolving sector.
Dr Can Van Luc, member of the National Financial and Monetary Policy Advisory Council, commented that Vietnamese investors are attracted to digital currencies by promises of rapid profits, following trends, and the allure of cutting-edge technology. However, this enthusiasm is marred by prevalent scams, such as the iFan scandal, which caused billions of VND in losses. The rapid growth of digital currencies fosters a speculative environment, diverting capital from traditional industries and potentially destabilizing social and family structures. This trend demands careful regulation to protect investors and ensure economic stability.
Vietnam requires swift and comprehensive research to formulate an appropriate policy for foreign digital currencies seeking acceptance within its borders. An experimental legal framework for all digital assets, particularly cryptocurrencies, is imperative, allowing for evaluation before broader implementation. Licensing and rigorous monitoring of domestic digital currency exchanges are indispensable for investor protection and market stability.
Effective inter-agency coordination is crucial to ensure the synchronized and efficient execution of digital currency policies, preventing regulatory gaps and fostering a secure environment for digital asset trading. This proactive approach will enable Vietnam to navigate the complexities of the digital currency landscape effectively.
Director Truong Thanh Duc of ANVI Law Company, Arbitrator of the Vietnam International Arbitration Center, voiced that Vietnam’s digital currency management lags, lacking a clear legal framework despite widespread investment. Managing these currencies as virtual assets is crucial to mitigate economic and social risks while contributing to growth. This move, demonstrating innovation and business freedom, attracts foreign investment. A legal framework will curb overseas transactions, preventing foreign currency outflow.
