Digital Asset Management and Trading in Vietnam: The Urgent Need for a Suitable Legal Framework

Many Opportunities, High Risks

Digital assets in Vietnam currently exist in a legal grey area. This results in many activities related to crypto assets, including crypto transactions, occurring on foreign exchanges, leading to tax revenue losses, difficulty in controlling capital flows, and money laundering and terrorist financing activities. Additionally, individual investors are not protected from risks such as fraud and price manipulation.

In March, the Ministry of Finance submitted to the Government a draft resolution on the pilot implementation of the issuance and trading of crypto assets. According to the Ministry of Finance, the crypto asset market is developing rapidly, presenting opportunities but also posing potential risks.

Implementing a controlled testing mechanism (sandbox) will allow regulatory agencies to monitor and evaluate the market’s actual activities before official application, helping Vietnam harness the potential of crypto assets for capital mobilization for production, business, and digital economy development. It will also minimize risks such as money laundering, terrorist financing, and other illegal financial activities.

The Ministry of Finance emphasizes that an important issue is the tax policy regarding digital assets. Accordingly, the current legal system has a basis for taxing goods and services, including crypto asset businesses. However, due to the lack of specific provisions on the classification and determination of the nature of crypto assets, there are still many obstacles in tax policy implementation. Therefore, if the specialized law clearly defines crypto assets as a type of commodity or legal asset, transactions related to them will be subject to tax obligations under current regulations.

At a recent seminar on crypto assets held in Ho Chi Minh City, Dr. Truong Minh Huy Vu, Director of the Ho Chi Minh City Institute for Development Research, said that despite the lack of a clear legal framework, the scale of crypto transactions by Vietnamese people is estimated to be as high as $100 billion per year, with approximately 27 million accounts participating. This indicates a significant demand that currently falls into a legal “grey area,” resulting in most profit-generating activities and costs related to crypto assets of Vietnamese citizens occurring overseas in countries like Singapore, the US, and Hong Kong.

Consequently, Vietnamese investors face considerable risks when participating in this type of investment. This situation underscores the urgent need to develop the crypto asset market and pilot the construction of a legal framework based on the principles of sustainable development and consumer protection, preventing the risk of fraud.

Development with Control

According to the Vietnam Blockchain Association, establishing a legal framework will not only help control risks but also facilitate the contribution of capital from crypto assets to the economy. With transaction volumes in the crypto asset market surpassing $100 billion annually, it indicates the emergence of opportunities in the international arena. If managed and exploited reasonably, the digital asset market can contribute hundreds of millions of dollars in taxes each year while stimulating other sectors such as tourism and e-commerce.

Additionally, it can minimize social issues arising from uncontrolled investment activities. Investors will also gain a better understanding of what constitutes an officially recognized transaction and will be protected within the legal framework of the state.

Dr. Huynh Thanh Dien, an economic expert, also believes that the legal vacuum has turned Vietnam’s digital asset market into a “tax haven,” despite its inherent risks. Due to the lack of strict management and taxation of transactions, this market has attracted a large number of participants for ownership and trading.

Therefore, the need for a legal framework is urgent. However, it is crucial that this framework ensures the sustainable development of the market, curbs speculation, and encourages investment to create a solid foundation for the economy.

“The goal of establishing a legal framework is to facilitate the capital mobilization of actual businesses, especially directing capital flow into fields with good investment prospects, such as high technology and innovation. Market participants must comply with regulations on registration, identity verification, anti-money laundering, counter-terrorist financing, and investor protection. Tax policies should aim to impose higher taxes on speculative capital (short-term crypto) and provide tax incentives for practical investors (STO) and enterprises developing security tokens linked to real assets. Combining these two elements will foster the sustainable development of the digital asset market, curb speculation, and encourage investment in fields that create a solid foundation for the economy,” emphasized Dr. Dien.

Meanwhile, Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, believes that researching and implementing national crypto asset management is essential. However, to effectively manage crypto assets, it is necessary to adhere to certain principles. The legal framework should closely follow the spirit of the directives of the Party and the State, aiming to create and promote development while controlling risks. It is crucial to remove immediate obstacles while maintaining a long-term vision to ensure the sustainability of policies and avoid imposing additional costs on businesses and citizens. We must also anticipate global trends, particularly those related to scientific and technological advancements, digital transformation, the digital economy, and digital assets. The framework must be feasible, effective, and efficient, in line with international commitments and Vietnam’s current legal system.