Tapping into millions of holders of digital assets

Tapping into millions of holders of digital assets

Building a suitable legal framework for digital assets could help Vietnam generate an additional $100 billion to boost innovation and digital economic development. Phan Duc Trung, chairman of the Vietnam Blockchain Association, explained how with VIR’s Hoang Oanh.

Vietnam is researching a pilot for digital asset and cryptocurrency exchange. How does the Vietnam Blockchain Association (VBA) assess the impact of this on blockchain startups and the Vietnamese economy?

Phan Duc Trung, chairman of the Vietnam Blockchain Association

Vietnam has the opportunity to become a regional hub for blockchain application, attracting international investors. Establishing a sandbox will provide conditions for businesses to experiment and develop innovative blockchain application models.

The controlled testing mechanism has a positive impact on fostering innovation, serving as a foundation to promote the application of blockchain in various sectors such as finance, healthcare, education, and logistics. This will create a sustainable innovative ecosystem, driving digital transformation in businesses and society.

A December resolution addressed AI, cloud computing, blockchain, semiconductors, quantum technology, nanotech, and sets specific goals for 2030 as well as a vision for 2045.

When applied to daily life, blockchain tech will become a digital asset, with fintech being the first industry to be impacted. The government’s selection of a cryptocurrency exchange platform for experimentation is just the beginning of this process.

According to a TripA report, Vietnam currently has approximately 20 million people who own cryptocurrency assets, accounting for over 21 per cent of the population and ranking fifth globally. With a legal framework and appropriate policies in place, legitimising these resources will have a significant impact on boosting the economy.

What are the association’s expectations for the implementation of a regulatory sandbox in Vietnam in blockchain and digital assets?

The VBA is currently researching and exchanging views with localities, especially the central city of Danang, on the implementation of a sandbox.

In January, we signed a cooperation agreement with the People’s Committee of Danang to research and propose specialised policy mechanisms for an international financial centre.

We aim to become a bridge to seek innovative startups operating in blockchain technology application, thereby building better policies after implementing the sandbox in Danang.

Moving forward, we will continue to engage with localities to better pinpoint the specific trial options for applying blockchain technology, primarily in the financial sector. A clear legal framework is crucial for localities to establish appropriate legal corridors.

Do the VBA’s members face any legal barriers in operating or testing new technologies?

Cryptocurrency and digital assets in Vietnam are still in a legal gray area.

Currently, Vietnam does not have a specific legal framework to manage these types of assets, including cryptocurrencies, digital tokens, and other forms of blockchain assets.

The State Bank of Vietnam does currently not recognise cryptocurrencies as a legitimate means of payment, while the Ministry of Finance and related agencies are still researching to develop appropriate regulations fit for the future.

The lack of a clear legal framework puts businesses and investors at risk, especially in raising capital, trading and protecting their rights. At the same time, this also poses challenges in state management, anti-money laundering, and financial fraud prevention. Many businesses are aware of this, so they tend to shift to overseas areas with clearer legal frameworks, such as Europe, where there are attractive policies for innovative startups.

Fundamentally, the digital assets show a cross-border and global nature. With a clear legal framework in place, activities related to digital assets and cryptocurrencies in Vietnam will be more convenient, helping to explore and promote the community in applying high technology in practice.

What can Vietnam learn from sandbox models in blockchain around the world?

Sandbox models around the world are being implemented very effectively, such as in the city of Lugano in Switzerland, which has promoted blockchain technology in payment sectors, financial applications, and also in terms of attraction of investment activities.

We conducted surveys in Lugano and found that the banking and finance sector contributes to 40-50 per cent of the GDP, with 8,400 employees working in financial institutions. Lugano’s strengths lie in its low tax policies and stable legal environment, making it very attractive to investors.

The city has also established a startup investment fund worth the equivalent of over $110 million, regularly supporting startups, investing in innovative projects, organising global blockchain events to draw in blockchain businesses to Lugano, and building a community of experts.

Many sandbox models in the world have been successful and have brought about great potential. However, the challenge of simultaneously testing and building a legal framework is significant, requiring thorough research.

VIR