Vietnam to pilot digital currency exchange

The Ministry of Finance and the State Bank of Vietnam are studying the legal framework for digital asset and cryptocurrency management. The ministries must issue this legal framework in March, as requested by Prime Minister Pham Minh Chinh.

At the Government press conference on the afternoon of March 5, Deputy Minister of Finance Nguyen Duc Chi said that digital assets are a complex and new issue for Vietnam and many countries in the region and the world. Countries are also researching ways to transparently manage this type of asset to serve socio-economic development.

Mr. Chi said that the Government leaders saw the above trend and directed the early completion of the legal framework for digital assets and digital currencies. Earlier this week, the Government Standing Committee chaired a meeting to hear a report on this matter.

"The Ministry of Finance is being assigned to report to the Government in March to issue a Resolution allowing the pilot operation of digital currency and virtual currency exchanges," said Mr. Chi, adding that this will help investors and individuals have a place to trade and invest in these types of assets.

More specifically, according to the leader of the Ministry of Finance, the trading floor will be organized and operated by units licensed by the State. That is, the State will protect the legal rights of investors and people when participating in this market.

Previously, at the regular Government meeting this morning, Prime Minister Pham Minh Chinh requested the Ministry of Finance to submit regulations on the management of cryptocurrencies and digital assets in the spirit of "doing it, learning from experience and gradually expanding".

In addition, Deputy Minister Nguyen Duc Chi said the Ministry of Finance was assigned to develop regulations allowing Vietnamese enterprises to issue virtual assets to mobilize financial resources. This, he said, would help them keep up with the general trend of virtual assets, contribute to economic development, and serve growth goals.

Cryptocurrencies such as Bitcoin, Ethereum... are considered popular virtual assets. However, Vietnam does not have a specific definition of virtual currency and virtual assets. Current regulations only mention the concept of electronic money anchored to legal currency, existing in the form of bank prepaid cards and electronic wallets.

The lack of a legal framework for digital assets has led many businesses to register in Singapore or the US and then operate in Vietnam, causing a loss of competitive advantage and tax revenue. From the user's perspective, the lack of transparency leads to risks in transactions. Therefore, the early promulgation of a legal framework to regulate the identification and valuation methods of digital assets will help businesses access capital from banks, thereby having money to invest.

At the end of February, working with the Central Policy and Strategy Committee on economic growth targets, General Secretary To Lam said it was necessary to study the application of a controlled testing mechanism (sandbox) to establish a trading floor for digital assets.

According to data from the Vietnam Blockchain Association, in the period of 2021 - 2022, Vietnam is in the top 3 in the world in terms of the percentage of people owning digital assets (equivalent to 21% of Vietnam's population owning), only after the UAE and the US. The flow of digital assets into Vietnam in 2023 will reach 120 billion USD, according to a report by market analysis organization Chainalysis.