Viet Nam needs to promptly develop a combined legal framework for real estate tokenization

According to Dr. Pham Nguyen Anh Huy, Senior Lecturer in Finance, RMIT University Vietnam, although the pilot launch of a digital asset market is a necessary step to embrace the trend of digital finance, it also entails many challenges.

Identifying the Challenges

When real estate is traded in the form of tokens, the greatest risks lie in legal issues and property ownership rights. If tokens are not firmly tied to actual ownership of underlying assets, disputes over “who is the real owner” can easily arise, especially in cases of corporate bankruptcy or mortgaged assets. Alongside this, cybersecurity and technical risks are also major concerns. Smart contract bugs, loss of private keys, or cyberattacks could result in the loss of digital assets and disrupt transactions. Furthermore, incomplete information or non-transparent valuation of underlying assets could lead to misguided investment decisions, undermining investor confidence.

At present, token ownership is not yet linked to land-use rights, since the Land Law has not been updated, creating potential conflicts when smart contracts clash with existing legal provisions. Notably, the market may also face price manipulation risks, particularly at a stage when transaction volumes remain low, making prices highly volatile. “Whale” investors can easily hoard or dump tokens en masse to manipulate prices.

"International experience, especially from Singapore and the United States, shows that success in linking real estate with digital assets depends on having a clear legal framework. For instance, the U.S.-based company RealT sells real estate online, enabling transactions from nearly anywhere in the world. Real estate on RealT is fractionalized, allowing investors to invest any amount that fits their needs. In addition, RealT has shortened the time to purchase property from a minimum of 30 days with numerous third-party procedures down to just 30 minutes, all through a phone or computer. Tokenization has thus made real estate investment more accessible to almost anyone", said Dr. Pham Nguyen Anh Huy.

Moreover, countries that have succeeded in this field place strong emphasis on Know Your Customer (KYC) rules, Anti-Money Laundering (AML) measures, and active transaction monitoring. Exchanges and service providers are required to implement strict AML procedures and report unusual transactions.

Strengthening the Legal Framework

To realize real estate tokenization and minimize risks, in Dr. Pham Nguyen Anh Huy's view, Viet Nam needs to promptly develop a combined legal framework that recognizes smart contracts as a legitimate form of electronic evidence, equivalent to paper contracts. At the same time, establishing exchanges that act as “market makers” will help ensure liquidity; applying multi-signature mechanisms to tokenized real estate transactions will enhance security. In addition, the creation of insurance funds or compensation schemes will protect investors in case of disputes. A dedicated arbitration center to quickly handle conflicts is also a crucial solution, contributing to building investor trust in the market.

For real estate enterprises, Dr. Pham Nguyen Anh Huy said it woule be essential to clearly identify data sources, collection methods, and standardize information to ensure transparency and consistency. At the same time, technological capability, auditing, independent valuation, and investor relations management are indispensable factors for an effectively functioning market. Risk mitigation must also go hand in hand with transparent mechanisms for resolving ownership disputes. Transparency should be strengthened through detailed prospectuses, audited financial statements, and independent valuations. At the same time, regulations on custody, segregation of client assets, risk insurance, and recovery plans in case of incidents must be strictly applied.

In addition, to prevent price manipulation and abnormal market activities, an automated monitoring system, internal transaction controls, and restrictions on unusual trading behaviors should be established. During the pilot phase, priority should be given to institutional investors and projects with transparent cash flows, while limiting excessive promotion to retail investors. To protect market participants, a compensation fund, stringent technical safety standards, and investor education campaigns are necessary to raise awareness of risks, enabling cautious and sustainable participation.