Digital assets create prospects for financial securities products

Digital assets create prospects for financial securities products

While the rising popularity of digital assets may pressure stock market liquidity, it also presents opportunities for businesses to adjust models to stay ahead, securities firms acknowledge.

Securities firms may seek to launch crypto exchange-traded funds, Photo: Shutterstock

According to information shared by the Ho Chi Minh City Blockchain Association on March 14, the number of Vietnamese investors in digital assets is four times higher than those in the stock market.

Association chairman Nguyen The Vinh said that the estimated annual cryptocurrency trading volume from Vietnam has reached $800 billion, a figure that is over four times the stock market’s trading volume.

The data was sourced from a Wall Street Journal report, highlighting Vietnam as the fourth-largest market on the Binance exchange. “The $800 billion figure only includes cryptocurrencies such as coins and tokens, excluding the non-fungible token market. If included, the total could reach $1 trillion annually,” said Vinh.

Thomas Nguyen, chief global markets officer at SSI Securities Corporation, told VIR that as Vietnam develops a legal framework for digital assets, the stock market could face increased competition but also take on brand new opportunities for expansion.

“Securities firms recommend that regulators create a balanced and clear regulatory environment that fosters innovation while ensuring investor protection,” he said. “This is one place where Vietnam could even outperform the US with proper market development. The goal should be to develop the digital asset market rather than worry about cannibalising other investment products.”

Nguyen also noted that securities firms are developing new investment products like tokenised assets and exploring partnerships with fintech companies to stay ahead of the curve.

“Some will even look into the possibility of launching crypto exchange-traded funds once the regulatory framework is in place. The focus is on educating clients about digital assets and integrating blockchain technology to enhance efficiency and transparency,” he added.

Global historical trends showed that the stock market often experiences significant effects when digital assets boom, raising questions about whether securities firms are closely monitoring this relationship for future trends.

Do Bao Ngoc, deputy CEO of CSI Vietnam Construction Securities, noted that digital assets are shaking up Vietnam’s stock market as while they create opportunities for securities firms to expand financial products, concerns over capital dispersion highlight the need for a clear regulatory framework to ensure balance and transparency between the two markets.

“This trend allows some securities firms to introduce blockchain-related products, fintech solutions, or digital asset securitisation. However, many firms worry that capital could shift from traditional stocks to digital assets, reducing liquidity, particularly for mid- and small-cap stocks.”

Taking a more cautious stance, Ngoc noted a portion of individual investors, particularly of a younger generation, are shifting their funds from stocks to crypto and other digital assets. However, this trend may be cyclical.

“Although digital assets could pressure stock market liquidity in the short term, in the long run, both markets can develop in parallel with appropriate regulatory policies,” Ngoc said. “When digital assets enter a correction phase or face stricter regulations, capital may return to the stock market. Securities firms acknowledge that digital assets still carry high volatility and legal risks, so capital has not entirely shifted away from traditional stock markets.”

Nguyen The Minh, head of Research & Development for Retail Clients at Yuanta Securities Vietnam, believed digital assets will broaden financial products rather than directly compete with traditional investments, ultimately attracting capital flows into Vietnam’s financial hub as envisioned by the government.

“I see digital assets as an alternative investment channel that provides more options for investors. This asset class will significantly support the development of personal financial management services in the future,” Minh said. “To capitalise on this trend, securities firms will likely focus on building wealth management products for clients or consider digital assets as part of the wealthtech investment landscape.”

Minh emphasised that the rise of digital assets is inevitable, forming an integral part of the international financial hub ecosystem without entirely diverting capital from traditional stock markets.

“The stock market still plays a crucial role in corporate fundraising, and remains an attractive investment channel at different times, depending on its inherent market appeal. However, digital assets also pose risks if regulations are unclear and outdated management approaches persist. Without stringent oversight, digital assets could become a tool for money laundering,” Minh cautioned.

VIR