The Prime Minister has just requested the Ministry of Finance to preside over and complete the dossier of the pilot resolution to manage activities related to virtual assets and encrypted assets, and report to the Government Standing Committee before March 13.

Previously, the Ministry of Finance and the State Bank were assigned to submit to the Government a legal framework for managing digital assets and digital currencies this March.

According to experts, piloting a cryptocurrency exchange in Vietnam opens up opportunities to develop the digital asset market and promote the digital economy. However, the challenges are also huge and need to be carefully studied.

Opportunities come with challenges and risks

Sharing with VietNamNet reporter, Dr. Dang Minh Tuan, Chairman of Vietnam Blockchain Alliance, cited statistics from a number of organizations showing that the flow of digital assets into Vietnam in 2023 will reach 105-120 billion USD. This figure accounts for about 1/4 of Vietnam's GDP.

Mr. Tuan assessed that digital assets are one of the important components of the digital economy; an opportunity for Vietnam to become a center of digital assets in the region and the world.

However, the Chairman of the Vietnam Blockchain Alliance said that this is a new field with many risks because digital assets and cryptocurrencies have large and fast fluctuations, different from the stock market.

“Digital assets and cryptocurrencies are easily traded across borders with many anonymous transactions, making control, including anti-money laundering and anti-terrorist financing, challenging. Vietnam is experimenting in a context where the legal framework has not been verified in practice, there is no in-depth research or management experience for this new type of asset, so there will be many potential risks,” said Mr. Tuan.

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According to experts, the first legal framework needs to recognize cryptocurrencies and digital assets and allow businesses to record the value of these assets on their balance sheets. Photo: Trong Dat

Therefore, according to the expert, management and licensing of exchanges is necessary.

“There needs to be an agency or organization that assesses whether cryptocurrency exchanges meet technical requirements, anti-money laundering measures, consumer protection and liquidity. At the same time, there needs to be an insurance fund to compensate users in case the exchange is attacked or loses assets.

In addition, it is necessary to apply measures to monitor unusual transactions, promote international cooperation, participate in anti-money laundering organizations and enhance information security and safety," Mr. Tuan recommended.

The Chairman of the Vietnam Blockchain Alliance believes that Vietnam can learn from management models around the world. For example, Singapore applies a sandbox mechanism for exchanges and businesses in the field of blockchain and digital assets.

Japan has a strict legal framework to regulate exchanges, while Dubai has created a testing ground for businesses and has a fairly open policy towards foreign businesses in this field.

In particular, Vietnam can learn from China, which strictly prohibits cryptocurrency trading. This policy has limited the flow of investment capital into digital assets and forced businesses in this field to move to foreign markets.

In the US, regulatory inconsistencies have led to disputes as one agency considers cryptocurrencies as assets, while another classifies them as commodities. Vietnam can learn from this situation by clearly defining the nature of cryptocurrencies and digital assets - whether they are considered assets, securities, or utility tokens operating within the blockchain ecosystem... to avoid future legal conflicts.

Legal framework proposal

Speaking to VietNamNet, Associate Professor Dr. Nguyen Huu Huan from the Ho Chi Minh City University of Economics said that currently, Vietnamese accounting standards do not recognize cryptocurrencies and digital assets as assets and have no value. Therefore, the first legal framework needs to recognize cryptocurrencies and digital assets and allow businesses to record the value of these assets in their balance sheets.

According to Mr. Huan, when building a digital currency exchange, the management mechanism to prevent money laundering and terrorism financing must be put first.

“Most digital assets in the world today are traded anonymously. The question is whether Vietnam will allow this form of transaction or not? If it is allowed, control will face many challenges, but if not, there needs to be an appropriate mechanism for management,” Associate Professor Dr. Nguyen Huu Huan raised the issue.

He proposed a solution to require listing on centralized exchanges. These exchanges need to transparently disclose customer transaction information or when requested by authorities. Usually, these exchanges are managed by the Government to ensure safety, transparency and limit the risk of money laundering," Associate Professor Dr. Nguyen Huu Huan said.

Regarding monetary policy, the expert raised the question: Under what mechanism will Vietnam recognize cryptocurrency, and what will be its impact on monetary policy when the economy has a type of currency not issued by the Government, affecting the regulation of money supply and demand.

“The money supply and demand mechanism will change, no longer following the traditional model. This requires the State Bank and relevant agencies to conduct thorough research to build a model suitable for the new context of the digital currency market. The goal is for cryptocurrencies to effectively support monetary policy, instead of becoming a burden,” Mr. Huan commented.

In addition, Associate Professor, Dr. Nguyen Huu Huan said that Vietnam needs to soon deploy a digital currency issued by the Government (CDBC). The State Bank of Vietnam has researched this issue and putting CDBC into operation will create a foundation for transactions on the exchange, while establishing an exchange mechanism with digital currencies in the world.

In addition, he also emphasized the importance of studying the mechanism to control the flow of money in and out of the country when transacting across borders.

According to Mr. Huan, trading floors can be located in international financial centers, where cross-border transactions are more convenient. This helps to take full advantage of global development trends, while still ensuring currency security and risk control.

The Prime Minister requested that before March 13, the Ministry of Finance coordinate with relevant units to promptly complete the pilot resolution dossier to manage activities related to virtual assets and crypto assets.