Vietnam PM calls for more detailed digital currency regulation

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Vietnam’s Prime Minister Pham Minh Chinh has called for comprehensive rules that will regulate the digital assets industry in the country. The comments are coming on the heels of a discussion group with cabinet members over the increasing threat of the unregulated use of the asset class.

Chinh expressed disappointment that despite the absence of legal backing, “people continued to trade” virtual currencies. “It is necessary to study appropriate sanctions, and assign the government to make detailed regulations,” he said.

The prime minister highlighted that the country’s parliament was considering a bill on Anti-Money Laundering (AML) regulation and urged lawmakers to include a provision for virtual currencies. The provision of digital currencies in the new AML bill will force digital asset service providers in the country to operate like banks and other financial institutions in terms of money reporting.

At the moment, virtual currencies operate in a gray area because of the shortage of regulation to govern the growing ecosystem. However, several policy documents are being deliberated by regulators, with parliamentarians mulling over an appropriate tax regime for the industry.

Huy Nguyen, Vice Chairman of the Vietnam Blockchain Association, noted that once the appropriate framework is established, “institutional money will flow in.”

Prior to the prime minister’s call for tighter legislation, several lawmakers have been urging the governor of the State Bank of Vietnam to wield his statutory powers to make rules for the sector. Duong Van Phuoc, a representative in the National Assembly, had warned of the increasing usage of virtual assets by money laundering and high-profile gambling rings.

Virtual assets continue to thrive in the absence of a framework

Despite the scarcity of legislation for the digital asset industry, adoption rates in Vietnam are one of the highest in the world. A Chainalysis 2022 Global Crypto Adoption Index reported that Vietnam was the leading country in local digital currency adoption.

The Vietnamese government mentioned decentralized ledger technology (DLT) as part of its fourth Industrial Revolution strategy in a policy document. To test the viability of the technology, the government instructed the State Bank of Vietnam to explore a central bank digital currency (CBDC) using DLT as the base infrastructure.

Vietnam is home to several Web 3 companies that are carving a name for themselves globally, like Sky Mavis, creators of the non-fungible token (NFT) gaming platform Axie Infinity. At least ten Vietnamese startups have reached a valuation of over $100 million since Sky Mavis, and Axie Infinity attained unicorn status.

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