Cryptocurrency Bitcoin. The draft Law on Digital Technology Industry has raised the very first regulation about the definition of digital assets, which is an important step towards legalising such assets in Việt Nam. — AFP/VNA Photo

HÀ NỘI — Careful consideration must be given to the compilation of a legal framework for digital assets in Việt Nam to ensure its on-track development, experts have said. 

Many countries in the region have developed legal frameworks to regulate the flow of digital assets and ensure their positive contributions to the economy, rather than worrying over its impacts on economic stability, Phan Đức Trung, Deputy President of the Việt Nam Blockchain Association said. 

It is now pressing for Việt Nam to develop a legal framework for digital assets, he said, citing statistics of market analysis organisation Chainalysis, which reported that crypto assets in Việt Nam are forecast to reach US$120 billion in 2023, up from $100 billion in 2022. Việt Nam was also among the top three countries in the world with the highest percentage of digital asset owners, at 21 per cent, after the UAE and the US in the 2021-22 period.  

Deputy General of the Việt Nam Chamber of Commerce and Industry Đậu Anh Tuấn said that the draft Law on the Digital Technology Industry has raised the very first regulation about the definition of digital assets, which is an important step towards legalising digital assets in Việt Nam. 

Due to the absence of a legal framework for digital assets, several investment projects were forced to leave Việt Nam to establish bases in other countries. For example, a Vietnamese technology start-up with a game ecosystem, Sky Mavis, had to choose Singapore as its headquarters.    

If Việt Nam wants to be a destination for digital technology investors, a level framework is critical to ensure the formation of the digital technology industry, its rapid development, as well as the rights and benefits of related parties, he said.  

Deputy Director of the Tax Policies, Fees and Charges Supervisory Authority under the Ministry of Finance, Trương Bá Tuấn, said that digital assets have developed strongly in Việt Nam in recent years. 

Although Việt Nam has not established a legal framework for digital assets, the transactions take place through unofficial exchanges, he pointed out.

The regulations on digital assets must clarify digital assets, their legal status, and their features as a basis for developing policies for a synchronous legal framework. 

A long-term strategy

He said the management of digital assets may involve the participation of many relevant ministries, and the Ministry of Finance will focus on developing tax policies on digital assets. 

Tuấn said that before taxing digital assets, it is important to clarify whether they are a kind of asset.

According to Anh Tuấn, the bottleneck lies in how we define digital assets, and approaches vary across countries.  

He pointed out that some countries regard digital assets as a type of stock, some as a type of special asset and some as a mixed asset.

He said regulations on protecting ownership rights and mechanisms to handle disputes are also needed. In addition, problems related to responsibilities in information storage and network security must be addressed. 

He said, however, that it is not easy. The development of the legal framework for digital assets will require amendments to many other laws, including Civil Law.   

“Việt Nam must take step by step to complete the legal framework based on the reality, but it’s time to begin,” he said. “We might need a long-term systematic strategy for the development of the legal framework on digital assets to ensure consistency. The legal framework must exploit benefits while prevent risks, thus a combination of policies is critical, including policies on money laundry prevention, banking, security, confidentiality and taxes."  

Trần Huyền Dinh, CEO of AlphaTrue, said the Vietnamese Government has developed several policies to accelerate digital transformation and promote the development of a digital economy.

The Prime Minister’s Decision No 194/QĐ-TTg for the first time mentioned virtual asset services provider (VASP). A draft decree on sandbox for fintech is also underway, together with a draft Law on Digital Technology Industry.

However, greater efforts to improve the legal framework are needed, he said. 

The absence of a legal framework for crypto assets causes a lot of difficulties for enterprises as well as attracting investments into Việt Nam, he said. 

“I expect that the impending Law on Digital Technology Industry and relevant regulations will bring transparency, create favourable conditions for enterprises, prevent brain drain and attract more foreign capital into Việt Nam.”

The sandbox for new technologies should also be sped up to consolidate the confidence of enterprises when investing in these fields and contributing to the development of the digital technology industry in Việt Nam, he said. 

He said enterprises must prepare, including developing plans for compliance, especially with regulations on preventing money laundering and terrorist financing and for a more efficient and safer system to manage digital assets. 

The draft Law on Digital Technology Industry is expected to be submitted to the National Assembly for consideration and approval at their coming meeting. — VNS