The Prime Minister has recently instructed the Ministry of Finance to finalize a pilot resolution for managing activities related to virtual and digital assets, with a report due to the Standing Government Committee by March 13.

Earlier, the Ministry of Finance and the State Bank of Vietnam were tasked with developing a legal framework for digital assets and cryptocurrencies within the same timeframe.

According to experts, piloting a cryptocurrency exchange in Vietnam presents significant opportunities for developing the digital asset market and fostering a digital economy. However, they caution that the initiative also comes with substantial risks that require thorough research and regulatory measures.

Opportunities and risks ahead

Dr. Dang Minh Tuan, Chairman of the Vietnam Blockchain Alliance, cited data indicating that digital asset inflows into Vietnam reached between $105 billion and $120 billion in 2023, accounting for nearly a quarter of the country’s GDP.

Tuan emphasized that digital assets play a crucial role in the digital economy, offering Vietnam an opportunity to position itself as a regional and global hub for blockchain-based financial transactions.

However, he warned that the market is highly volatile, with rapid fluctuations distinct from traditional stock markets.

"Digital assets and cryptocurrencies enable seamless cross-border transactions, often involving anonymous trading, which poses challenges in controlling money laundering and terrorist financing. Vietnam is entering this experimental phase without a tested legal framework, in-depth research, or management experience in this emerging sector, which entails considerable risks," Tuan said.

For this reason, he stressed the importance of regulating and licensing cryptocurrency exchanges.

"It is necessary to establish an oversight authority to assess whether digital asset exchanges meet technical standards, implement anti-money laundering measures, ensure consumer protection, and maintain liquidity. Additionally, an insurance fund should be introduced to compensate users in cases of cyberattacks or asset loss," he suggested.

Tuan also highlighted the need for monitoring unusual transactions, enhancing international cooperation, and strengthening cybersecurity measures.

He pointed to regulatory models in countries such as Singapore, which has adopted a regulatory sandbox approach for blockchain and digital asset businesses, and Japan, where strict regulations govern cryptocurrency exchanges. Meanwhile, Dubai has created a dedicated testing environment for blockchain enterprises and offers favorable policies for foreign investors in this sector.

Vietnam can also learn from China's stringent ban on cryptocurrency trading, which has significantly restricted investment in digital assets and forced companies to relocate abroad.

In contrast, the U.S. has experienced inconsistencies in cryptocurrency regulation, with different agencies classifying digital currencies as either assets or commodities. Vietnam must clearly define the legal status of cryptocurrencies - whether they are considered assets, securities, or utility tokens within blockchain ecosystems - to avoid future regulatory conflicts.

Establishing a legal framework

Associate Professor Dr. Nguyen Huu Huan from the University of Economics Ho Chi Minh City noted that Vietnam’s current accounting standards do not recognize digital currencies or assets as legitimate financial holdings. Therefore, the first step in the legal framework should be acknowledging digital assets and allowing businesses to record them in financial statements.

Huan emphasized that any cryptocurrency exchange must prioritize anti-money laundering measures and counterterrorism financing regulations.

"Most digital assets worldwide are traded anonymously. The key question is whether Vietnam will permit anonymous transactions. If allowed, it will be difficult to regulate; if not, there must be an appropriate mechanism to oversee such activities," he explained.

One proposed solution is requiring centralized cryptocurrency exchanges to disclose transaction details transparently and provide information upon regulatory request.

"Government-managed exchanges would ensure transparency, security, and minimize the risks of money laundering," Huan added.

From a monetary policy perspective, he raised concerns about how the recognition of digital currencies would impact Vietnam’s economic stability. The introduction of a non-government-issued currency could complicate money supply management and disrupt traditional financial models.

"The supply and demand of money will shift away from conventional models, requiring the State Bank of Vietnam to carefully study and develop a regulatory framework that ensures digital currencies support, rather than undermine, monetary policy," Huan said.

Additionally, he emphasized the need for Vietnam to implement a central bank digital currency (CBDC). The State Bank of Vietnam has already conducted research on this initiative, and launching a CBDC would facilitate cryptocurrency exchange transactions while establishing an official mechanism for integrating with global digital assets.

Huan also stressed the importance of regulating cross-border financial flows in digital transactions.

"Cryptocurrency exchanges should be strategically positioned in international financial centers where cross-border transactions can be efficiently managed. This approach would allow Vietnam to leverage global financial trends while maintaining monetary security and minimizing risks," he concluded.

Nguyen Le