He warned that hesitation in this area could result in Vietnam falling behind and missing out on valuable opportunities in the digital economy. As the global financial landscape shifts towards digitalization, Vietnam must take proactive steps to regulate and harness the potential of digital currencies.
Struggles in Legalizing Digital Currency
The rapid development of digital currencies has posed significant legal and regulatory challenges worldwide. While many countries have already recognized and adapted their legal frameworks to manage digital assets effectively, Vietnam has been slow to determine whether or not to legalize digital currencies. This indecision has created an uncertain business environment and limited the country's ability to capitalize on the growth of digital finance.
According to data from Chainalysis, global digital currency transactions reached approximately $11 trillion in 2023, despite market volatility. Countries such as the United States, Japan, Germany, and Singapore have acknowledged digital currencies as legitimate assets, even permitting their trade on stock exchanges. In these countries, people can use Bitcoin to shop, dine, and pay for services without any legal barriers. The integration of digital currencies into mainstream financial systems has led to increased innovation and economic benefits.
In contrast, Vietnam lacks official statistics on digital currency transactions, but estimates suggest that annual transactions may reach billions of dollars. However, these transactions occur mainly in unregulated markets or through decentralized platforms, making them difficult for the government to monitor. This lack of oversight results in tax revenue losses and exposes the financial system to risks such as money laundering, fraud, and market instability. Without clear regulations, businesses and investors face uncertainty, discouraging long-term investment in the digital economy.
During a meeting with the Central Policy and Strategy Committee, Prime Minister Pham Minh Chinh also called for the development of a legal framework for digital currency. He emphasized the importance of managing digital assets effectively without stifling the growth of the digital economy. A well-structured legal framework could balance innovation with security, enabling Vietnam to become a competitive player in the global digital finance landscape.
Past experiences highlight the consequences of an inadequate legal framework. For example, FPT University once pioneered the acceptance of Bitcoin as a tuition payment option for international students. However, the initiative was swiftly halted, and the university was penalized for its decision. This incident underscores the need for a well-defined legal structure. Without swift action, Vietnam risks missing out on significant opportunities in the digital economy. Other businesses may hesitate to explore digital financial solutions without legal clarity, further delaying Vietnam's progress in this sector.
Learning from Global Models
Legalizing digital currency not only helps regulate underground transactions but also unlocks economic potential. A well-defined legal framework would allow digital currencies to contribute to the development of international financial hubs, attract investment, and expand capital markets in Vietnam. The success of countries that have embraced digital currencies can serve as valuable lessons for Vietnam as it moves toward regulatory clarity.
With a population of 100 million and strong GDP growth, Vietnam has immense potential to leverage digital payment and investment channels. The rise of e-commerce and fintech solutions further underscores the need for a robust digital currency framework. If properly regulated, digital currencies could facilitate faster and cheaper cross-border transactions, reduce reliance on traditional banking systems, and increase financial inclusion for the unbanked population.
However, unregulated anonymous transactions outside the traditional banking system pose significant risks, including money laundering, terrorist financing, and financial fraud. Legalizing digital currency would not only mitigate these risks but also create a transparent legal environment to support sustainable financial market growth. Establishing clear regulations would also provide legal protection for consumers and investors, fostering trust in the digital financial ecosystem.
To harness the benefits of digital currency while minimizing its risks, Vietnam should take cues from successful regulatory models worldwide. Implementing a regulatory framework for digital currency exchanges would ensure transparency and oversight. Licensed platforms would help prevent money laundering, fraud, and other financial crimes while protecting investors' interests. A government-backed licensing system could enhance credibility and attract foreign investment into Vietnam’s digital finance sector.
The government could also experiment with digital currency adoption in controlled environments such as e-commerce, cross-border payments, and import/export transactions. These pilot programs would help evaluate feasibility before broader implementation. Lessons learned from these programs could guide policymakers in refining regulations for nationwide adoption.
Introducing tax regulations for digital currency transactions would help generate government revenue while discouraging tax evasion. Many countries already tax cryptocurrency earnings, ensuring compliance and boosting public funds. Proper tax policies could turn digital currencies into a legitimate source of income for the government while also discouraging illicit financial activities.
The growing digital finance sector demands professionals with expertise in blockchain technology, cybersecurity, and financial regulations. Enhancing public awareness and workforce training in these areas will be essential for a smooth transition into digital currency integration. Educational institutions and industry leaders should collaborate to develop specialized training programs to equip professionals with the necessary skills.
Vietnam could initiate its digital currency legalization journey by establishing pilot legal frameworks in economic hubs like Ho Chi Minh City and Da Nang. Gradually, the scope could be expanded, ensuring a flexible and effective approach. By initially focusing on key financial centers, the government can monitor the impact of digital currency adoption before scaling it nationwide.
The rise of digital currencies is an inevitable trend in the digital economy. Establishing a legal framework sooner rather than later will prevent Vietnam from lagging behind and will open doors to new financial innovations, increased investment, and enhanced national competitiveness. Delaying action could mean forfeiting a valuable resource that could significantly contribute to Vietnam’s economic development.
