Cryptocurrency transactions, including Bitcoin, are becoming increasingly common in Vietnam, yet the nation still lacks a comprehensive legal framework to govern their ownership and trading. While the State Bank of Vietnam prohibits the use of cryptocurrencies as legal payment methods, there are no clear guidelines for their regulation, leaving investors vulnerable and creating challenges for authorities tasked with oversight.
Prime Minister Pham Minh Chinh has acknowledged that despite the growing prevalence of Bitcoin transactions, the field remains largely unregulated. This legal grey area exposes the market to risks such as fraud, market manipulation, and money laundering, while also preventing Vietnam from fully capitalising on blockchain’s potential to drive economic and technological innovation.
Without clear rules, investors face significant risks, including the lack of protection against losses on unregulated platforms and the dangers posed by the anonymity of blockchain technology, which can facilitate money laundering and terrorist financing. A robust regulatory framework is urgently needed to promote transparency, enhance security, and build trust in the cryptocurrency market.
However, regulation should go beyond merely mitigating risks. It should also support innovation and position Vietnam as a hub for blockchain technology, attracting foreign investment and advancing the country’s digital economic development.
Several countries have successfully implemented strategies to manage cryptocurrencies, providing valuable lessons for Vietnam. Japan, for instance, recognised Bitcoin as a legal means of payment in 2017 and requires cryptocurrency exchanges to register and comply with stringent anti-money laundering (AML) and cybersecurity measures. This dual focus on investor protection and fostering blockchain innovation has positioned Japan as a leader in the field.
Singapore also strikes a balance between regulation and innovation. The Payment Services Act mandates licences for cryptocurrency businesses and enforces strict AML measures, while a regulatory sandbox allows blockchain startups to test innovative solutions in a controlled environment. This approach fosters creativity while maintaining oversight.
The European Union’s Markets in Crypto-Assets Regulation provides a unified framework for cryptocurrency governance, enhancing transparency and ensuring market sustainability across member states. In the United States, regulatory responsibilities are decentralised, with agencies such as the Securities and Exchange Commission and the Commodity Futures Trading Commission enforcing compliance to safeguard investors and uphold market integrity.
For Vietnam, the first step in crafting a regulatory framework is defining whether cryptocurrencies like Bitcoin are assets or securities. This classification will provide clarity for managing transactions and protecting investors. Additionally, requiring cryptocurrency exchanges to register and comply with AML regulations will enhance transparency and mitigate financial risks.
Adopting a regulatory sandbox, as seen in Singapore, can encourage innovation in blockchain technology under government supervision. Such an approach not only ensures accountability but also supports the development of groundbreaking solutions.
Balancing investor protection with technological advancement is critical. A well-designed regulatory framework will unlock blockchain’s potential to drive economic growth while safeguarding Vietnam’s financial system. With the right policies, Vietnam can create a secure, transparent, and innovative cryptocurrency environment, paving the way to becoming a leading blockchain hub in the region.
Vietnam faces growing pressure to regulate cryptocurrencies as transactions rise. Learn how clear regulations can balance investor protection with innovation and economic growth.
