Encouraging investment and development of digital asset ecosystem in Vietnam

Proposal for the Ministry of Public Security and the State Bank to jointly manage

The issuance and trading of crypto assets are growing rapidly in terms of issuance volume, transaction value and complexity. The Ministry of Finance stated that the widespread popularity of crypto assets globally poses opportunities, challenges and risks to the stability of the financial system and the development of economies.

Therefore, the Ministry believes that the pilot implementation of the crypto-asset market on a limited scale is suitable for practical conditions in Vietnam. This aims to create a flexible legal environment that can quickly adapt to innovation within the framework of State management and supervision, thereby supporting capital mobilization for production and business development, developing the digital economy and promoting economic growth.

The Ministry of Finance affirmed that the pilot implementation allows management agencies to thoroughly study and evaluate the feasibility and conditions for practical implementation, minimize illegal acts such as money laundering and terrorist financing, protect investors, create the premise for developing a transparent, safe and sustainable financial market; At the same time, avoid risks to the economy due to the high volatility of digital assets. Not to mention, the pilot implementation not only helps the State collect revenue from the crypto-asset market but also contributes to bringing this activity into a transparent framework, avoiding tax losses and limiting speculation and price manipulation.

Notably, in the draft proposal on pilot implementation of issuance and trading of cryptocurrencies, the Ministry of Finance proposed a coordination mechanism between management agencies such as the Ministry of Finance, the Ministry of Public Security, and the State Bank of Vietnam (SBV). Explaining this proposal, the Ministry of Finance said that one of the most important issues when building a legal framework for digital assets is how to balance between protecting investors and promoting innovation.

Accordingly, the Ministry of Finance, in its leading role, is proposing solutions to support startups in the digital asset sector, while establishing regulations to ensure market transparency. Meanwhile, the State Bank of Vietnam is tasked with monitoring the impact of digital assets on monetary policy and the financial system. The Ministry of Public Security will play an important role in preventing fraud, scams and money laundering in the digital asset market.

“The coordination between these agencies will help create a safe digital asset ecosystem, while opening up new opportunities for innovative businesses,” the Ministry of Finance affirmed.

Tax policy considerations

Regarding tax policies for crypto asset transactions, the Ministry of Finance said that the current tax law system has comprehensive provisions, ensuring a legal basis for tax collection on goods and services purchased, sold and consumed in Vietnam as well as businesses and individuals (both domestic and foreign) trading in goods and services in Vietnam. This focuses on value-added tax, corporate income tax, and personal income tax.

However, the specialized legal system related to crypto assets has not yet clearly defined the identification and classification of crypto assets as well as the business, purchase and sale, and exchange of these types of assets, thereby serving as a basis for the application of corresponding tax policies. Accordingly, in cases where specialized laws on crypto assets clearly define the nature and allow crypto assets to be traded and traded as a type of asset, tax obligations will be performed according to the provisions of tax law. "However, to avoid reducing the attractiveness of the market, the Government can consider applying preferential tax rates in the early stages. This will help encourage investment and promote the development of the digital asset ecosystem in Vietnam," said a representative of the Ministry of Finance.

In addition, the Ministry of Finance believes that there should also be a mechanism to control tax evasion and tax fraud in this field. Some countries have applied blockchain technology to track and monitor digital asset transactions, thereby ensuring transparent and effective tax collection. Vietnam can also learn from the experiences of these countries to build a tax management system suitable for the domestic context.

Ninh Co