It is necessary to improve the legal framework for cryptocurrency market


VCN – The cryptocurrency craze erupted from late 2021 to the early months of 2022 but then knocked many players down with sharp plunges. However, Dr. Pham Nguyen Anh Huy, Senior Lecturer in Finance, Founder of RMIT FinTech-Crypto Center, RMIT University Vietnam, believes that properly implemented cryptocurrency projects will help promote innovation and creativity of the country as well as towards the digital economy.

Dr. Pham Nguyen Anh Huy, Senior Lecturer in Finance, Founder of RMIT FinTech-Crypto Center, RMIT University Vietnam.
Dr. Pham Nguyen Anh Huy, Senior Lecturer in Finance, Founder of RMIT FinTech-Crypto Center, RMIT University Vietnam.

What do you think about the cryptocurrency market in Vietnam today?

During the period from late March 2020 to mid-November 2021, crypto projects mushroomed.

With the “get rich quick” and “gambling” mindset of most Vietnamese crypto investors along with the lack of a legal framework, Vietnam was being evaluated as one of the most dynamic crypto trading hubs in the world.

When faced with some scam projects, investors still somewhat believe in the ability to recover losses by betting on other projects leading to further losses. This behavior may be caused by investors thinking that crypto projects just like any startup that can have a failure rate of over 90%. This mindset will not help investors, especially retail investors, because, in the long run, they will be pushed out by big players or “whales” due to the manipulative nature of the market.

Despite the above challenges, Vietnam maintains a unique position – a nascent cryptocurrency hub and is growing in various respects. The reason comes from the fact that Vietnam still has a significant proportion (about 68-70% of the population) of working-age adults in the next 10 to 15 years. Vietnam is also predicted to have about 50% of the population in the middle class by 2030, becoming one of the top 20 economies with the largest population in the middle class.

As a young and tech-savvy population, they are expected to drive cryptocurrency adoption. In addition, education is also key to maintaining Vietnam’s position as a crypto hub. Vietnam gathers universities with high rankings in blockchain and cryptocurrency education.

However, Vietnam still lacks a legal framework for cryptocurrencies. How will this affect activity in the market, sir?

Currently, the legal regulation of cryptocurrencies in Vietnam is still unclear. The government is aware that crypto assets can destabilize the financial system and the economy if they are not controlled. While cryptocurrency exchange providers have to go through a rigorous selection process to obtain a license in Singapore and then Hong Kong, exchanges like Binance or Remitano are free to operate in Vietnam without owning a financial service provider license. Besides, investors who earn profits from cryptocurrencies do not have to pay any taxes.

Therefore, the lack of a legal framework has led to a number of problems. Specifically, the lack of tools to protect investors if they are scammed, encountered difficulties in tracing crypto-related criminal and fraudulent activities such as money laundering, the volatile business environment and particularly, the Tax authority is not able to collect taxes from crypto-related activities. In the long run, these issues could decrease market confidence and make Vietnam less attractive, especially once the “excitement” wears off.

With the above problems, in your opinion, how should the relevant ministries and agencies act?

Relevant agencies need to amend, supplement and promulgate new regulations to improve the legal framework for the management and handling of virtual assets, virtual currencies, digital assets, and cryptocurrencies.

This is a necessary action when Vietnam plans to establish a modern and sustainable national digital financial foundation, contributing to economic growth, while ensuring macroeconomic stability and financial security. Vietnam needs to take the necessary actions to become a crypto hub with a favorable regulatory framework and to be the headquarters of the world’s top crypto companies. The implemented crypto projects will help promote national innovation as well as the digital economy.

Furthermore, the public and private sectors must be willing to experiment with cryptocurrencies to increase liquidity and efficiency and contribute to reducing financial risks when the regulatory framework is solid and facilitated. Therefore, Vietnam still has a lot of work to do, otherwise, Vietnam could lose its chance to be a pioneer in this cryptocurrency race.

Thank you Sir!

By Huong Diu/Phuong Linh


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