Digital and cryptocurrency assets, characterized by anonymity, cross-border transactions, and decentralization, are highly susceptible to criminal exploitation.

Therefore, strict regulatory measures are needed to penalize non-compliant exchanges, including license revocation and criminal prosecution if linked to terrorism financing.

Nearly $100 billion in cryptocurrency flows into Vietnam

At the seminar titled "Sharing experiences in managing and operating centralized cryptocurrency exchanges," organized by the Vietnam Blockchain Association on March 27, Lieutenant Colonel Duong Duc Hung, Deputy Head of the Anti-Terrorism Department under the Ministry of Public Security, cited a report from Chainalysis revealing that from October 2021 to October 2022, the total value of cryptocurrency flowing into Vietnam was estimated at $90.8 billion.

Among this, nearly $1 billion was identified as associated with illegal activities, including scams, money laundering, and other violations.

According to Mr. Hung, this figure not only reflects the strong appeal of cryptocurrency to Vietnamese individuals and businesses but also exposes potential vulnerabilities in managing digital money flows within the country.

Meanwhile, Vietnam has yet to establish specific laws or regulations to manage cryptocurrency assets and exchanges.

Nguyen Thi Minh Tho, Deputy Director of the Anti-Money Laundering Department at the State Bank of Vietnam, emphasized that building a legal framework for digital assets, virtual assets, and cryptocurrency exchanges is a top priority for leaders and an essential need for the economy.

Call for a comprehensive legal framework

Commenting on the current legal landscape of the digital asset market, Phan Duc Trung, Chairman of the Vietnam Blockchain Association, said that promoting the pilot implementation of cryptocurrency exchanges along with the Digital Technology Industry Law, expected to be approved in May 2025, demonstrates the government's strong commitment to establishing a legal framework in the field of digital assets.

He noted that legalizing decentralized finance not only ensures the legitimacy of cryptocurrency assets but also fosters technological innovation and global integration, helping Vietnam maximize resources from the rapidly growing crypto market while fulfilling government commitments to anti-money laundering.

However, Mr. Trung warned that for exchange operators, stringent legal regulations could result in substantial financial burdens, as compliance costs can be significant beyond just charter capital or licensing fees.

Lieutenant Colonel Hung proposed issuing a comprehensive legal framework that clearly defines the legal responsibilities of exchanges in combating terrorism financing, including the application of Know Your Customer (KYC) procedures and the reporting of suspicious transactions.

The licensing process for exchanges should mandate transparency regarding legal entities, charter capital, and technical systems. Severe penalties should be imposed on non-compliant exchanges, including license revocation and criminal prosecution if found linked to terrorism financing.

Additionally, centralized cryptocurrency exchanges in Vietnam should integrate blockchain analytics tools like Chainalysis, ChainTracer, or Elliptic to monitor and trace transactions in real-time.

A centralized monitoring system, managed by the State Bank of Vietnam or the Ministry of Public Security, should be established to collect transaction data and analyze suspicious behavior patterns.

Mr. Hung also suggested encouraging exchanges to develop AI solutions to automatically detect transactions potentially related to terrorism financing, such as frequent small transactions or money transfers through multiple intermediary wallets.

Meanwhile, Dr. Hoang Van Thuc, Director of the Cryptography Engineering Academy, stressed the importance of establishing technical standards and regulations on cryptographic assets, stablecoins, and cryptocurrency exchanges.

He advocated creating safety and security criteria for cryptocurrency trading services, including protocols for inspecting and certifying security levels to ensure the safe and transparent operation of the market.

Nguyen Le