Nearly 100 billion USD of cryptocurrency flows into Vietnam

At the workshop "Sharing experiences in managing and operating centralized crypto-asset exchanges", organized by the Vietnam Blockchain Association on March 27, Lieutenant Colonel Duong Duc Hung, Deputy Head of the Counter-Terrorism Department, Department of Homeland Security (Ministry of Public Security) cited a report by Chainalysis saying that from October 2021 to October 2022, the total value of cryptocurrencies flowing into Vietnam is estimated at 90.8 billion USD.

Of that, nearly $1 billion was identified as being related to illegal activities, including fraud, money laundering and other violations.

According to Mr. Hung, this number not only reflects the attraction of cryptocurrencies to Vietnamese people and businesses, but also shows potential loopholes in the management of digital currency flows in our country.

Meanwhile, Vietnam does not have specific laws or decrees to manage crypto assets and exchanges.

Ms. Nguyen Thi Minh Tho, Deputy Director of the Anti-Money Laundering Department (State Bank), said that building a legal framework for digital assets, virtual assets, encrypted assets as well as digital asset trading floors is an order of leaders at all levels and an inevitable need of the economy.

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Experts say that there should be strict sanctions against non-compliant exchanges, including license revocation and criminal prosecution if they are involved in terrorist financing. Photo: NL

According to Ms. Tho, with three basic characteristics of digital assets, crypto assets are anonymous, cross-border and decentralized - very easy to be exploited by criminals, especially money laundering and terrorist financing.

Therefore, most countries, when establishing a legal framework for operating digital asset management exchanges and crypto assets, set out requirements for anti-money laundering and anti-terrorist financing management.

To date, in Vietnam, legal documents have not been issued and are operating in a “gray zone”. When reviewing the anti-money laundering and anti-terrorism financing mechanisms in Vietnam, the Financial Action Task Force has placed our country on the “gray” list - that is, countries with risks of money laundering and terrorist financing...

"Vietnam must build a legal framework to manage virtual assets and virtual asset service providers and must prove that the legal framework operates effectively," said Ms. Tho.

A comprehensive legal framework is needed.

In a general assessment of the current legal picture of the digital asset market, Mr. Phan Duc Trung, Chairman of the Vietnam Blockchain Association, said that promoting the pilot implementation of crypto-asset trading floors at the same time as the Law on Digital Technology Industry, expected to be passed in May 2025, demonstrates the Government's strong determination in building a legal framework in the field of digital assets.

“Legalizing decentralized finance helps ensure the legality of crypto assets, while promoting global technological innovation and integration, helping Vietnam optimize resources from the vibrant growing crypto market and fulfill the government's commitment to anti-money laundering.”

However, for exchange operators, Mr. Trung noted, strict legal regulations can create great cost pressure for businesses that do not have enough financial resources. Because compliance costs are a big issue that needs to be considered when operating an exchange, not just charter capital or licensing fees.

Lieutenant Colonel Duong Duc Hung proposed that it is necessary to issue a comprehensive legal framework, which clearly stipulates the legal responsibilities of trading floors in preventing and combating terrorist financing, including applying KYC (know your customer identity verification process) and reporting suspicious transactions.

Licensing procedures for exchanges, requiring transparency in legal identity, charter capital and technical systems. There are strict sanctions for exchanges that do not comply, including license revocation and criminal prosecution if found to be related to terrorist financing.

In addition, centralized crypto-asset exchanges in Vietnam need to integrate blockchain analytics tools such as Chainalysis, ChainTracer or Elliptic to track and trace transactions in real time. Establish a centralized monitoring system operated by the State Bank or the Ministry of Public Security, directly connected to exchanges to collect transaction data and analyze unusual behavior patterns.

Mr. Hung suggested that exchanges should be encouraged to develop AI solutions to automatically detect transactions that show signs of being related to terrorist financing, such as repeated transactions with small amounts but high frequency or transferring money through many intermediary wallets.

Meanwhile, Dr. Hoang Van Thuc, Director of the Academy of Cryptography, emphasized the need for a system of standards and technical regulations on cryptography for crypto assets, stablecoins, and crypto asset exchanges.

According to Mr. Thuc, it is necessary to develop a set of criteria for information safety and security for crypto-asset trading services. In addition, there are regulations on checking and certifying the level of security, safety and security for organizations providing crypto-asset trading services to ensure the safe and transparent operation of the market.

Vietnam needs to soon deploy a digital currency issued by the Government . According to experts, putting a digital currency issued by the Government (CBDC) into operation will create a platform for transactions on the cryptocurrency exchange, while establishing an exchange mechanism with cryptocurrencies around the world.

Source: https://vietnamnet.vn/hon-90-ty-usd-tien-ma-hoa-vao-viet-nam-gan-1-ty-usd-gay-lo-ngai-lon-2385057.html