How to develop a legal framework for cryptocurrencies

In recent years, the growth of the digital economy has supported the establishment of a new asset: virtual assets. According to the Boston Consulting Group, by 2030, tokenized virtual assets would account for 10% of global GDP, or $16.1 trillion USD. Although there are numerous definitions for virtual assets, they are essentially numerical values that may be sold and swapped.

In actuality, several governments throughout the world have developed rules and legal frameworks for digital assets in general, and virtual assets and cryptocurrencies in particular, including the European Union, Japan, the United States, and certain Asian countries like China, Thailand, and Singapore...

According to experts, the government's requirement for the Ministry of Finance to lead research and develop a legal framework to regulate or prohibit cryptocurrencies and virtual assets is a firm and positive step toward restoring Vietnam's credibility in the international community after being placed on the FATF's enhanced monitoring list due to insufficient anti-money laundering mechanisms, including those relating to cryptocurrencies and virtual assets.

Furthermore, establishing a legal framework to govern cryptocurrencies and virtual assets will serve as the foundation for regulating associated transactions, fulfilling tax duties, resolving disputes, and combating fraud, which is becoming an increasingly serious issue.

Many experts believe that establishing legal frameworks for cryptocurrencies and virtual assets is an essential answer in the current situation and should be enacted and enforced as soon as possible.

Mr. Do Ngoc Quynh, Secretary-General of the Vietnam Bond Market Association, believes that given the current magnitude of virtual asset transactions, efficiently employing capital from diverse virtual assets will benefit the Vietnamese economy.

"Vietnam today has one of the most open economies in the world. We profit, but we also suffer unfavorable consequences. Whether we like it or not, Vietnam has one of the largest cryptocurrency communities in the world. Without suitable behavior, the Vietnamese economy will not profit from the good qualities of this," Mr. Do Ngoc Quynh stated.

Similarly, this expert believes that most governments are apprehensive and concerned about dealing with diverse virtual assets. This is because money sovereignty is one of the most crucial sovereignties for any country.

As a result, in making recommendations for policy development and improvement, the Secretary-General of the Vietnam Bond Market Association thinks that in order to employ foreign capital, Vietnam traditionally considered the USD to be a form of asset. People could store and deposit it in banks to earn interest, but they were not permitted to make payments in USD.

"We may explore dealing with different virtual assets in a similar way," the expert suggested.

According to Mr. Nguyen Doan Hung, former Vice Chairman of the State Securities Commission, the government has directed the Ministry of Finance to conduct a study and create a legal framework to regulate or prohibit different virtual assets and enterprises that provide virtual asset services.

"Whether or not to recognize, ban, or regulate virtual assets will create conflicts of interest between traditional investment and business groups such as real estate, stocks, bonds, and those pursuing digital economy fields such as Blockchain, AI, IoT,...," said the former Vice Chairman of the State Securities Commission.

According to a recent report by Crypto Crunch App, Vietnam ranks third in the world in terms of the number of people holding cryptocurrencies, with more than a quarter of the population owning cryptocurrencies, making it one of the leading countries in terms of cryptocurrency trading volume. Vietnam has received cryptocurrency worth tens of billions of dollars.

Therefore, according to experts, the lack of a legal framework for cryptocurrencies and virtual assets has led to a rise of fraudulent activities linked to cryptocurrencies while the state suffers from tax losses. Building management policies for virtual assets and cryptocurrencies, in particular, must address issues such as: recognizing virtual assets and cryptocurrencies; developing tax policies for virtual assets and cryptocurrencies; preventing money laundering through cryptocurrencies and virtual assets; ensuring information security and personal data when transacting virtual assets and cryptocurrencies...