Is the Vietnam Crypto Policy Finally in Place? Regulation Update

2025-06-24

Earlier this month (June 2025), Vietnam took a historic stride by officially recognizing digital assets within its legal framework, a development that initially sparked widespread optimism among local crypto entrepreneurs and market participants.

This move was viewed as a long-overdue breakthrough, promising a clearer operating environment for domestic companies keen on leveraging the country's burgeoning digital asset sector.

Vietnam Crypto Policy, Relief with A Sigh: Stringent Draft Rules

However, the initial euphoria has quickly been tempered by the emergence of a separate set of stringent draft rules. These proposed regulations, intended for Vietnam’s pilot crypto asset market, have triggered an industry backlash.

Concerns are mounting that the rules could inadvertently stifle innovation, introduce considerable legal uncertainties, and potentially impede the growth of businesses operating within Vietnam's otherwise vibrant crypto ecosystem.

The core question on many minds remains: Is Vietnam's crypto policy finally in place, or is this just the beginning of a complex regulatory journey?

A Pivotal Shift: Vietnam's Legal Recognition of Digital Assets

Vietnam's official acknowledgment of digital assets represents a profound shift from a largely unregulated or implicitly restricted environment.

For years, the legal status of cryptocurrencies remained ambiguous, creating an environment of uncertainty for investors and businesses alike. The recent legislative action provides a foundational legal basis, signifying that digital assets are no longer entirely beyond the purview of Vietnamese law.

This initial step is critical, as legal recognition is a prerequisite for developing comprehensive regulatory frameworks.

Chainalysis: Vietnam Ranks High In Crypto Markets

This development is particularly significant given Vietnam's prominent position in the global crypto market.

According to insights from US blockchain analysis firm Chainalysis, Vietnam consistently ranks among Asia’s top three crypto markets. The country has demonstrated an astonishing volume of crypto transactions, with an estimated figure exceeding US$100 billion between July 2023 and June 2024 alone.

This immense activity underscores a deep-seated public interest and active participation in the digital asset space, making clear and effective regulation not just desirable, but essential for the nation's financial stability and technological progress.

Legal recognition paves the way for integrating this substantial economic activity into the formal financial system, potentially unlocking new avenues for growth and investment.

The Regulatory Hammer: Understanding the Draft Rules

While the legal recognition of digital assets was met with enthusiasm, the subsequent unveiling of the draft resolution has introduced a more cautious sentiment within the industry.

This draft, currently being developed by the finance ministry and expected to be approved this year, outlines a strict regulatory framework that primarily targets centralized service providers in the crypto space.

Key requirements under this proposed resolution include:

Mandatory Licensing: All crypto service providers operating in Vietnam will be required to obtain explicit licenses from relevant authorities. This signifies a move towards a permissioned environment, where only approved entities can facilitate crypto activities.
Exclusivity for Approved Exchanges: The draft rules suggest that Vietnamese users will be mandated to store and transact their digital assets exclusively on exchanges that have received official approval and licensing from the government. This could significantly restrict the use of international exchanges or direct peer-to-peer transactions.
Focus on Centralized Entities: The resolution specifically targets entities involved in proprietary trading (trading on their own account) or acting as intermediaries in the issuance, custody, or trading of crypto assets. This implies a clear focus on traditional exchange models and other centralized virtual asset service providers (VASPs), potentially leaving the treatment of decentralized finance (DeFi) or peer-to-peer (P2P) models less clear or outside the immediate scope.

The broad scope of these restrictions and the emphasis on centralized control suggest a regulatory approach aimed at tightly governing the flow of digital assets to ensure compliance with financial oversight and anti-money laundering measures.

Addressing Deficiencies: Vietnam's FATF Grey List Challenge

A significant driving force behind Vietnam's decisive regulatory actions is its current status on the Financial Action Task Force's (FATF) grey list. The Financial Action Task Force (FATF) is an intergovernmental organization that develops policies to combat money laundering and terrorist financing.

When a country is placed on the FATF grey list, it signifies that the nation has strategic deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks but has committed to resolving these issues.

Vietnam was placed on this list due to identifiable shortcomings in its ability to effectively address money laundering and terrorist financing risks. Critically, these deficiencies specifically included the lack of action to regulate virtual assets and virtual asset service providers (VASPs). For a nation, being on the FATF grey list carries tangible negative implications:

Increased Scrutiny: Financial institutions and businesses from other countries face increased scrutiny when engaging in transactions with entities from grey-listed nations, potentially complicating international trade and investment.
Reputational Damage: A grey-list status can harm a country's international financial reputation, making it less attractive for foreign direct investment and potentially increasing borrowing costs.
Reduced Access to Global Finance: Banks and financial services providers may become more risk-averse, leading to de-risking actions, such as closing correspondent banking relationships, which can limit a country's access to global financial markets.

In direct response to these pressures and to fulfill its commitment to the FATF, Vietnam's government has moved decisively over the past two years to bolster its regulatory framework. This proactive stance includes:

New Law on Digital and Emerging Technologies: The passage of a comprehensive new law now officially regulates a wide range of digital technologies. Importantly, this law explicitly includes digital assets such as virtual assets and crypto assets within its regulatory purview, providing the overarching legal foundation.
Draft Resolution on Licensing: As discussed, the finance ministry's proposed draft resolution directly addresses the FATF's concerns by imposing strict licensing and operational requirements for crypto platforms. This is a direct measure to bring VASPs under regulatory supervision.
Draft Decree for Penalties: Complementing the licensing framework, a draft decree has also been issued. This decree sets out specific penalties for violations in the crypto asset space, providing the necessary enforcement mechanisms to ensure compliance with the new regulations.

These concerted efforts underscore Vietnam's commitment to exiting the FATF grey list and establishing a more secure and compliant digital asset ecosystem.

Industry Concerns: The Unintended Consequences of Strict Regulation

Despite the overarching goal of fostering a safer and more regulated crypto market, the specific details of Vietnam's draft rules have sparked a notable industry backlash.

Crypto entrepreneurs and service providers in Vietnam are voicing significant concerns that the strictness and broadness of the proposed regulations could inadvertently stifle the very innovation they hoped legal recognition would unlock.

Tran Huy Vu, the chief executive at Kyber Network – a prominent global-facing service provider in the crypto space – articulated these concerns to The Business Times. He lamented that "Current regulations and draft rules are vague with a very broad scope of restrictions."

Vietnam Crypto Policy: Still Lacks of Clarity for Businesses

This lack of clarity is particularly problematic for businesses operating across borders, as it creates immense legal uncertainties.

For companies like Kyber Network, it remains unclear whether their global operations would be considered compliant under Vietnam's new framework, or what specific steps would be required to ensure compliance without compromising their international reach.

The dilemma facing regulators globally is how to effectively mitigate risks associated with cryptocurrencies, such as money laundering, consumer protection, and financial stability, without inadvertently stifling technological advancement and economic growth.

Critics argue that overly restrictive licensing regimes, especially those that heavily favor centralized models, could:

Stifle Innovation: By imposing high barriers to entry and operational complexities, strict rules might discourage new startups and innovative projects from developing within Vietnam.
Increase Compliance Costs: The process of obtaining licenses and maintaining strict compliance can be prohibitively expensive, especially for smaller businesses and startups, potentially leading to market consolidation by larger players.
Drive Activity Offshore: If the regulatory environment becomes too burdensome or unclear, crypto businesses and users might choose to operate from jurisdictions with more favorable or clearer rules, or even resort to unregulated, decentralized channels, making oversight more difficult.
Limit Consumer Choice: Mandating the use of only approved centralized exchanges could restrict users' access to a wider range of tokens, services, or decentralized platforms available globally.

The ongoing discussions around these draft rules highlight the delicate balance governments must strike between robust regulation and fostering a thriving digital economy.

The Road Ahead: Navigating a Complex Regulatory Landscape

Vietnam's recent steps mark a significant stride towards formalizing its stance on digital assets.

The legal recognition is a foundational achievement, moving the country from a state of ambiguity to one of official acknowledgment. However, the subsequent draft rules, while crucial for addressing FATF concerns, indicate that the regulatory journey is far from over.

The current situation is characterized by both progress and persistent challenges. While the government has moved decisively to put frameworks in place, the industry's concerns about vagueness and the broad scope of restrictions signal a need for further clarity and perhaps more stakeholder consultation.

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Will Vietnam Crypto Policy Succeed?

The success of Vietnam's crypto policy will ultimately depend on its ability to strike a balance between effective oversight and fostering a conducive environment for technological innovation and market participation.

Globally, various jurisdictions are grappling with similar challenges in regulating cryptocurrencies. Some, like the European Union with its Markets in Crypto-Assets (MiCA) regulation, are pursuing comprehensive frameworks.

Others, like the United States, have a more fragmented approach. Vietnam's evolving policy will be keenly watched by international observers, serving as a case study in how emerging economies navigate the complexities of digital asset regulation while striving to meet international financial standards.

The question "Is the Vietnam Crypto Policy Finally in Place?" can be answered with a qualified "yes, it's being put in place," but the specifics of its final form and industry impact are still being ironed out.

FAQs

Q1: What does "legal recognition of digital assets" mean in Vietnam?

A1: It means that digital assets like cryptocurrencies are now officially acknowledged within Vietnam's legal framework, moving beyond a state of ambiguity and laying the groundwork for regulatory oversight.

Q2: Why is Vietnam on the FATF grey list?

A2: Vietnam is on the FATF grey list due to strategic deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks, specifically including a lack of regulation for virtual assets and virtual asset service providers (VASPs).

Q3: What are Virtual Asset Service Providers (VASPs)?

A3: VASPs are businesses that conduct financial activities for or on behalf of customers using virtual assets. This commonly includes crypto exchanges, wallet providers, and firms facilitating transfers of virtual assets.

Q4: What is the primary concern of crypto businesses regarding Vietnam's draft rules?

A4: The primary concern is the vagueness and broad scope of restrictions, particularly regarding mandatory licensing and the exclusive use of approved centralized exchanges, which could stifle innovation and create compliance uncertainties for global operations.

Q5: What is "price discovery" in the context of new crypto listings?

A5: Price discovery is the process by which the market determines the fair value of a newly listed asset, based on the initial interaction of supply and demand from traders.

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Disclaimer: The content of this article does not constitute financial or investment advice.

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