The Ministry of Finance (MoF) will submit a digital currency legal framework to the government this month, which includes provisions to allow the pilot implementation of a cryptocurrency exchange.

Deputy Minister of Finance Nguyen Duc Chi speaks at the conference. Source: VGP

Deputy Finance Minister Nguyen Duc Chi announced the move at the government's regular press conference on March 5.

He said digital assets are a complex issue for Vietnam and many other countries. Like Vietnam, governments around the world are exploring ways to regulate these assets to support economic and social development.

The MoF, in coordination with the State Bank of Vietnam, is working on a legal framework to manage digital assets and cryptocurrencies, he said. According to Prime Minister Pham Minh Chinh's directive, the framework must be submitted by March.

"The Ministry of Finance is tasked with proposing a resolution to allow the pilot operation of a cryptocurrency exchange," he said, adding that this would provide investors and individuals with a formal platform to trade and invest in digital assets.

According to the MoF, the exchange will be operated by state-licensed entities. This means that the government will ensure the legal rights of investors and the public participating in the market.

Earlier in the day, at a regular cabinet meeting, Prime Minister Pham Minh Chinh instructed the Ministry of Finance to draft regulations on the management of digital assets and cryptocurrencies with the approach of "taking it step by step, learning from experience and expanding over time."

Chi also revealed that the MoF has been tasked with developing regulations that would allow Vietnamese businesses to issue virtual assets to raise funds. The move would allow them to keep pace with global trends in digital assets and contribute to economic growth.

Popular cryptocurrencies such as bitcoin and ethereum are considered virtual assets. However, Vietnam has yet to establish a clear legal definition of virtual currencies and digital assets. Current regulations only recognize electronic money backed by fiat currency, which exists in forms such as prepaid bank cards and e-wallets.

The lack of a legal framework for digital assets has led many Vietnamese companies to register in Singapore or the US before operating in Vietnam, resulting in a competitive disadvantage and loss of tax revenue. From a user perspective, the lack of legal clarity increases transaction risks. A legal framework defining and valuing digital assets would allow businesses to access financing from banks, securing investment capital.

In late February, during a meeting with the Central Policy and Strategy Committee on economic growth targets, General Secretary To Lam stressed the need to explore a controlled sandbox for the exchange of digital assets.

According to the Vietnam Blockchain Association, between 2021 and 2022, Vietnam ranked among the top three countries in terms of digital asset ownership, with around 21% of the population owning such assets, behind the UAE and the US. Market analysis firm Chainalysis reported that the inflow of digital assets into Vietnam reached US$120 billion in 2023.