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Vietnam’s minister advocates for crypto regulations, not ban

By:
on Apr 15, 2024
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  • A Vietnam Minister has said that cryptocurrencies are not banned in the country.
  • However, there is a need to formulate a comprehensive legal framework.
  • The Minister said a legal framework will mitigate any potential risks.

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The deputy director of the Economic and Civil Legislation Department in Vietnam, Cao Dang Vinh, has clarified that cryptocurrencies are not banned in the country, but there is a need for a comprehensive legal framework.

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According to a local report, the Minister noted that creating a legal framework to regulate these digital assets would help mitigate any potential risks.

Vietnam’s minister calls for crypto regulations

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The minister noted that the current framework included different interpretations for cryptocurrencies, digital currencies, and virtual assets. Moreover, there was a disparity in how the industry was regulated in different countries.

According to the official, the cryptocurrency industry presents various risks including money laundering. Moreover, cryptocurrencies were not recognized as a legal asset under Vietnamese law.

He also noted that Vietnam lacked the proper regulations to manage the development of cryptocurrencies. He expects that the Ministry of Finance will announce proposals while the Ministry of Justice will share more details.

The Vietnamese government wants the State Bank of Vietnam to consider a pilot program looking into the implementation of cryptocurrencies in a manner that prevents money laundering.

Crypto environment in Vietnam

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In the Chainalysis 2023 global crypto adoption index, Vietnam ranked third in the rate of cryptocurrency adoption. It joins the list of developing economies such as Brazil, India, Nigeria, and Pakistan which are also ranking high in terms of crypto adoption.

A majority of the crypto-related transactions happening in the country are executed on foreign platforms or via intermediaries. This trend goes to show that crypto firms lack the necessary regulations to sustain their activities.

The Vietnam Blockchain Association noted that in September 2023, the total value of cryptocurrencies sent to Vietnam neared $91 billion. Out of this amount, $956 million was classified as illegal transactions, which stresses the concerns made by the Ministry official on illegal transactions.

The Vietnamese Ministry of Finance is working on a potential framework that could prohibit the trade of virtual assets by May 2024. The ban was part of an initiative seeking to strengthen the anti-money laundering laws in the country.

The proposals tabled by the finance ministry seek to remove Vietnam from the “gray list” used by the Financial Action Task Force (FATF). The FATF is an intergovernmental entity looking to monitor the compliance of countries with money laundering laws.

Vietnam also boasts of a large pool of tech professionals and a high demand for cryptocurrencies. As such, the country has become a preferred hub for projects looking to expand their market reach.

Cryptocurrency exchanges operating in Vietnam are benefiting greatly from the increased crypto activities in the country. These firms will potentially generate more than $149 million worth of revenue by the end of the year, with the numbers expected to grow in the coming years. This growth is attracting regulatory attention.

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