Over the past years, cryptocurrency has been something that should not be mentioned publicly, but that is a hot topic for many people, especially as one of the main interests of young people in Vietnam.
Although Vietnam is ranked as a low-middle-income country with GDP (nominal) per capita of Vietnam in 2020 only 2,786 USD, ranked 119/176 (https://statisticstimes.com), Vietnam still has a fairly high level of acceptance for cryptocurrency in practice.
According to Chainalysis, Vietnam is a perfect example of a country where participation in cryptocurrency transactions far exceeds the ranking of its economy.
In 2020, the Global Crypto Adoption Index from Chainalysis showed that Vietnam ranked in the 10th position out of 154 countries in the Global Cryptocurrency Acceptance Index. In 2021, Vietnam suddenly rose to the top of the survey in this new year. This is one of the rare indexes where Vietnam appears in the top list among the more developed countries, even with a higher rank than many others, p.e the US, China, UK, France, Germany, Japan, or Korea.
Nevertheless, Vietnam is also constantly booming with blockchain, Gamefi, and metaverse projects. For example, we may mention Axie Infinity, an NFT based game developed by Sky Mavis, a Vietnamese gaming studio that hit $3 billion in equity valuation and $30 billion fully diluted valuations in October 2021 (source: Coinmarketcap).
Trung Nguyen, the CEO of Sky Mavis, has recently been also ranked as a member of the Top 10 people “who defined the year in crypto” in 2021 by CoinDesk.
The general picture of the legal status of Cryptocurrency in Vietnam
Blockchain application is, in general terms, encouraged in Vietnam. Nevertheless, cryptocurrency is still positioned in a gray legal zone. There is a lack of regulation for crypto-assets and digital coins that have not been recognized as digital assets or other legal assets. Indeed, these types of instruments currently cannot be used as means of transaction.
In 2017, the State Bank of Vietnam explicitly stated that cryptocurrency, in general terms, and BTC and Litecoin are not legal currencies. Neither should be categorized nor understood as means of payment in Vietnam.
With the blooming of the number of Vietnamese cryptocurrencies users, the Government seems to start paying more attention to this growing industry. As a relevant indicator, it can be stated that during 2021, there were at least three critical legal decisions relating to cryptocurrency in Vietnam:
- The most relevant is Decision No. 942/QD-TTG dated June 15, 2021, approving the strategy for the development of e-government towards the digital government for 2021-2025 with an orientation for 2030 (“Decision 942”). It is especially relevant because the government considered the research and use of cryptocurrency as one of the solutions to develop the digital government.
- Decision 942 raised a stir among Vietnamese investors. It seemed to be a signal that showed the government’s more open attitude towards the country’s cognitions and use of cryptocurrency. The official position had demonstrated strong opposition to mass adoption until this date.
- With Decision 942, a more open view was showcased, making investors feel more comfortable with the possibility of using and accepting cryptocurrencies in Vietnam.
As defined in Clause IV.1.h, one of the leading national key tasks to promote the adoption and use of innovation, including crypto-assets, is to:
“Ensure a legal environment that allows for experiments and accepts innovations as well as changes. Establish a space for pilot digital service provision and a legal framework that enables experimentation of unregulated digital services. The space for pilot digital service provision shall be a digital space that allows for pilot deployment of all innovative digital products and services that are not yet regulated by legislative documents and the scope, size, and operating models under strict technology-based supervision. Such products and services shall undergo assessment when a pilot deployment has reached a certain scale to establish necessary legal parameters.”
In April 2021, Vietnam’s Ministry of Finance announced that his office had established a research group on digital assets and cryptocurrency to achieve an appropriate policy and management mechanism for their use.
The competent authorities in Vietnam are also currently drafting the Law on Digital Technology Industry and amending many related laws.
Additionally, Vietnam has just recently issued the license to set up the Digital Asset Management Center in Ho Chi Minh City (“TSS’) in 2021. This will be the first center in Vietnam to digital research assets focused on providing services for digital assets, although these do not have any official regulation. It seems that presently, there is no specific definition or international consensus on what should be considered a TSS license. The only related case that may help the creation of a formula to work with this type of license is Taurus SA from Switzerland, which was a licensed securities firm from the Swiss Financial Market Supervisory Authority (FINMA) that operates as the first independent regulated marketplace for digital assets in the world.
They consider many of the facts mentioned above, such as the blooming of the number of Vietnamese cryptocurrencies users, new successful Vietnamese blockchain projects, and the government’s interest through a series of new policies. More people in Vietnam currently believe that the new Era for the digital economy is starting.
– This article solely states the personal view and opinions of the writer –