Vietnam is gearing up to pilot a digital currency exchange platform under a newly established regulatory framework. This is according to Deputy Minister of Finance Nguyen Duc Chi, who shared the update at a government press conference on Wednesday. The news initially broke on VnExpress.

Earlier in the week, on Monday, Prime Minister Pham Minh Chinh took a proactive step, tasking the Ministry of Finance and the State Bank of Vietnam with the creation of legal guidelines for managing digital assets and cryptocurrencies. These guidelines are expected to be ready and submitted before the end of this month.

Deputy Minister Chi explained, “The Ministry of Finance has been assigned to deliver a report to the government by March, putting forward a resolution to launch a pilot program for exchanges dealing in digital and virtual currencies.” He further noted that this initiative is designed to create a structured and regulated environment where both investors and the public can confidently trade digital assets.

To ensure investor protection, the exchange platforms will be run by entities licensed by the state, as clarified by Deputy Minister Chi. Adding to the regulatory push, the Ministry is also in the process of crafting rules that would enable Vietnamese companies to issue virtual assets as a means of raising capital.

Currently, Vietnam operates without clear-cut definitions for virtual currencies and digital assets. Existing regulations are limited, only encompassing electronic money that’s linked to the official currency through prepaid bank cards and digital wallets.

The Vietnam Blockchain Association has reported some compelling statistics: a significant 21% of the Vietnamese population are digital asset holders. This puts Vietnam in the global top tier, ranking third behind only the UAE and the US. Data from Chainalysis further reveals that digital asset inflows into Vietnam reached an impressive $120 billion in 2023.

This regulatory uncertainty has led to a situation where many Vietnamese businesses opt to register in places like Singapore or the US before commencing operations within Vietnam. This trend unfortunately results in a loss of competitive advantages for the nation and a dip in potential tax revenues.

Vietnam advances National Blockchain Strategy to take a regional lead

Looking back to last October, Vietnam demonstrated its forward thinking by unveiling a National Blockchain Strategy. The strategy is focused on boosting the nation’s capabilities in blockchain technology and establishing the necessary legal frameworks for digital assets.

The Ministry of Information and Communications (MIC) outlined five crucial action areas to be spearheaded by government bodies and the Vietnam Blockchain Association. These key areas include refining the legal landscape, building up infrastructure and a robust industrial ecosystem, developing skilled human resources, actively promoting blockchain development and its diverse applications, and fostering research alongside international partnerships.

As part of its ambitious goals, the strategy aims to cultivate 20 blockchain brands specializing in platforms, products, and services. There are also concrete plans to set up at least three testing centers in key cities. These centers will contribute to forming a national blockchain network with a strong emphasis on both security and innovative blockchain applications.

The official announcement emphasized, “Legalizing the definition of Digital Assets is a key step in realizing the Vietnamese government’s commitment to preventing and tackling money laundering, terrorism financing, and the proliferation of weapons of mass destruction.”