Vietnam’s cryptocurrency market operates without a regulatory framework, leading to challenges such as tax collection difficulties and investor risks. Authorities are working on a pilot policy inspired by the EU’s MiCA and EBRS to cultivate a safer trading environment. Despite its active market, comprising significant inflows of digital assets, Vietnam requires structured regulations to foster transparency and attract investments, a commitment demonstrated by the ongoing drafting of relevant laws. The Ministry of Finance proposes a tripartite governance approach for cryptocurrency exchanges, aiming to align Vietnam with successful international models for managing crypto assets.
Vietnam’s cryptocurrency market currently operates without a comprehensive regulatory framework, resulting in challenges such as ineffective tax collection and increased risks for investors. To optimise the potential of cryptocurrency while addressing these challenges, authorities aim to implement a pilot policy modelled after successful frameworks like the EU’s Markets in Crypto-Assets Regulation (MiCA) and the European Blockchain Regulatory Sandbox (EBRS). These models balance innovation with investor protection, providing a path for regulatory dialogue and experimentation.
European lawmakers were proactive in establishing regulations to support blockchain and crypto-assets, fostering an environment for innovation while ensuring investor safety by setting critical milestones like the MiCA, which takes effect in June 2024, and the EBRS, which launched in 2023. The EBRS allows selected blockchain projects to consult with regulators and test their concepts within a structured environment, promoting regulatory understanding and compliance.
As one of the most active crypto markets globally, Vietnam shows promising numbers in digital asset inflows, which reached $120 billion—approximately 25% of its GDP, highlighting substantial investor interest. However, the absence of clear legal parameters invites risks that may hinder sustainable growth. Establishing regulations will enhance market transparency and invite institutional investments for a more secure crypto landscape.
Vietnam’s government has demonstrated commitment to regulatory advancement by discussing the Law on Digital Technology Industry and outlining early directives to govern the crypto-asset market. Learning from the EU, Vietnam should appoint a lead authority for coordination, establish clear sandbox criteria aligned with national financial goals, and have structured implementation processes for pilot programmes.
Key implementation areas include oversight levels, exemptions, trial durations, and post-trial regulations, ensuring a fluid transition to a comprehensive legal framework. As the Vietnamese government leverages insights from the EU, it can tailor a general legal framework with embedded piloting mechanisms to foster local innovation before attracting foreign investment.
A coherent legal structure will significantly benefit Vietnam by unlocking foreign currency and providing a secure investment environment in the currently ambiguous crypto sector. The Ministry of Finance has proposed a collaborative governance model for overseeing cryptocurrency exchanges involving the Ministry of Public Security and the State Bank of Vietnam, signalling a strategic move towards regulated crypto trading. Bringing legal clarity to cryptocurrencies will enable Vietnam not only to boost its digital economy but also to create attractive opportunities for both domestic and foreign businesses.
