A clear legal framework for blockchain is needed to promote its on-track development and application in Việt Nam. — File Photo

HÀ NỘI — The investment capital flow is eyeing blockchain projects, offering significant opportunities for Việt Nam where this technology was booming to have unicorns in the global blockchain market.

Hoài Nam, founder of investment UB Holdings, said that with a friendly environment for blockchain and crypto together with an entrepreneurial spirit, Việt Nam was attractive to foreign investors and it’s time for blockchain project developers to show their capacity.

One of the recent notable deals was $150 million in funding led by crypto exchange Binance for the gaming studio Sky Mavis to help reimburse users who lost funds during a $625 million hack of its play-to-earn game Axie Infinity.

2021 witnessed the biggest ever investment of around US$25 billion pumped into the global blockchain market, representing a whopping rise of nearly 700 per cent.

The non-fungible token (NFT) market alone saw a rise of 13,000 per cent from $37 million in 2020 to $4.8 billion in 2021.

The figures showed that investment funds were attaching significant interest to blockchain, Trần Dinh, CEO of blockchain business advisory company Alpha True, said.

The industry had its ups and downs. The blockchain market had been quiet since the beginning of this year, especially in terms of GameFi (play-to-earn blockchain game).

However, Nguyễn Mạnh Khôi, CEO of Koru Capital, said that the investment flow into the blockchain market in Việt Nam would not lose momentum because a number of domestic and foreign funds were waiting for opportunities to pour money in qualified projects and companies.

Khôi said Việt Nam was an attractive market for investors thanks to the Government’s support for technology start-ups, a young population, a good workforce, high Internet coverage and high rate of population knowing about cryptocurrency which was in the top three in the world.

Legal barrier

The blockchain industry in Việt Nam was facing legal barriers which forced many blockchain start-ups to “go abroad” to Singapore, Cyprus and Europe to open a company.  

Statistics of Yield Guild Games showed that as of the beginning of May, there were around 1,000 blockchain game projects were being implemented in Việt Nam, among which Sky Mavis’s Axie Infinity was the most notable with a total market capitalisation once hitting $9.7 billion together with about 10 start-ups with market capitalisation of over $100 million.

However, most of them were based in foreign countries while the market and human force were mostly in Việt Nam.

Cris Duy Trần, co-founder of FAM Central, said that there was a lack of a clear legal framework for blockchain in Việt Nam, which caused problems in the operation and fundraising process. In comparison, the legal framework of Singapore was more friendly.

This was a type of brain drain as developers came from Việt Nam but the companies were located in other countries, making it difficult for Việt Nam to become a start-up nation.

According to Nguyễn Thành Trung, CEO of Sky Mavis, the fact that blockchain projects often chose Singapore was directly related to the capital flow. Receiving foreign investment in Singapore was much more convenient than calling for capital from Việt Nam, he said, adding that the laws in Singapore were also clear while in Việt Nam, deals with higher value would face bigger problem.

Trung said that a clear legal framework was a plus point for blockchain start-ups. The lack of a legal framework made start-ups feel nervous and force them to operate in a defensive mindset because of not knowing what would happen tomorrow.

Not only in Việt Nam, many countries lacked clear regulations for blockchain, digital assets, NFT or cryptocurrency. Technology changes rapidly and the legal framework must be adjusted to keep pace with its development and ensure its development is on the right track, Huy Nguyễn, co-founder of KardiaChain said.

Huy predicted that with a proper legal framework, blockchain technology would naturally creep into every corner.

According to Deputy Minister of Science and Technology Trần Văn Tùng, blockchain technology has large potential in Việt Nam with a large number of businesses, scientists and engineering pursuing research and application of this technology.

Tùng said that the ministry would review and amend the legal framework of the science and tecnology industry to create favourable conditions for blockchain research and development as well as spending resources in the development of blockchain applications.

At the Vietnam Blockchain Expoverse in Dubai in March, Nguyễn Ngọc Dung from the Ministry of Planning and Investment said that different countries had different levels of economic and technology development, thus, the application of new technologies would not be the same. She said that start-ups came to Singapore to solve the problem of capital raising then bring money back to Việt Nam to operate the project.

Dung said that the legal framework for international capital raising would be revised, making it easier for start-ups. — VNS