A clear legal framework for blockchain is needed to promote its on-track development and application in Vietnam. (File Photo)

Hoai Nam, the founder of investment UB Holdings, said that with a friendly environment for blockchain and crypto together with an entrepreneurial spirit, Vietnam was attractive to foreign investors and it’s time for blockchain project developers to show their capacity.

One of the recent notable deals was 150 million USD in funding led by crypto exchange Binance for the gaming studio Sky Mavis to help reimburse users who lost funds during a 625 million USD hack of its play-to-earn game Axie Infinity.

2021 witnessed the biggest ever investment of around 25 billion USD pumped into the global blockchain market, representing a whopping rise of nearly 700 percent.

The non-fungible token (NFT) market alone saw a rise of 13,000 percent from 37 million USD in 2020 to 4.8 billion USD in 2021.

The figures showed that investment funds were attaching significant interest to the blockchain, Tran Dinh, CEO of blockchain business advisory company Alpha True, said.

The industry had its ups and downs. The blockchain market had been quiet since the beginning of this year, especially in terms of GameFi (play-to-earn blockchain game).

However, Nguyen Manh Khoi, CEO of Koru Capital, said that the investment flow into the blockchain market in Vietnam would not lose momentum because a number of domestic and foreign funds were waiting for opportunities to pour money in qualified projects and companies.

Khôi said Vietnam was an attractive market for investors thanks to the Government’s support for technology start-ups, a young population, a good workforce, high Internet coverage and a high rate of the population knowing about cryptocurrency which was in the top three in the world.

Legal barrier

The blockchain industry in Vietnam was facing legal barriers which forced many blockchain start-ups to “go abroad” to Singapore, Cyprus and Europe to open a company.

Statistics of Yield Guild Games showed that as of the beginning of May, there were around 1,000 blockchain game projects were being implemented in Vietnam, among which Sky Mavis’s Axie Infinity was the most notable with a total market capitalisation once hitting 9.7 billion USD together with about 10 start-ups with a market capitalisation of over 100 million USD.

However, most of them were based in foreign countries while the market and human force were mostly in Vietnam.

Cris Duy Tran, co-founder of FAM Central, said that there was a lack of a clear legal framework for blockchain in Vietnam, which caused problems in the operation and fundraising process. In comparison, the legal framework of Singapore was more friendly.

This was a type of brain drain as developers came from Vietnam but the companies were located in other countries, making it difficult for Vietnam to become a start-up nation.

According to Nguyen Thanh Trung, CEO of Sky Mavis, the fact that blockchain projects often chose Singapore was directly related to the capital flow. Receiving foreign investment in Singapore was much more convenient than calling for capital from Vietnam, he said, adding that the laws in Singapore were also clear while in Vietnam, deals with higher value would face a bigger problem.

Trung said that a clear legal framework was a plus point for blockchain start-ups. The lack of a legal framework made start-ups feel nervous and force them to operate in a defensive mindset because of not knowing what would happen tomorrow.

Not only in Vietnam, but many countries also lacked clear regulations for blockchain, digital assets, NFT or cryptocurrency. Technology changes rapidly and the legal framework must be adjusted to keep pace with its development and ensure its development is on the right track, Huy Nguyen, co-founder of KardiaChain said.

Huy predicted that with a proper legal framework, blockchain technology would naturally creep into every corner.

According to Deputy Minister of Science and Technology Tran Van Tung, blockchain technology has large potential in Vietnam with a large number of businesses, scientists and engineering pursuing research and application of this technology.

Tung said that the ministry would review and amend the legal framework of the science and technology industry to create favourable conditions for blockchain research and development as well as spending resources on the development of blockchain applications.

At the Vietnam Blockchain Expoverse in Dubai in March, Nguyen Ngoc Dung from the Ministry of Planning and Investment said that different countries had different levels of economic and technology development, thus, the application of new technologies would not be the same. She said that start-ups came to Singapore to solve the problem of capital raising and then bring money back to Vietnam to operate the project.

Dung said that the legal framework for international capital raising would be revised, making it easier for start-ups.