As blockchain and cryptocurrencies has thrived vigorously, nations all over the world, including Vietnam, are ramping up blockchain adoption. According to Forbes magazine, Vietnam is heralded to become one of the next Southeast Asia’s blockchain innovation hubs. However, the regulatory framework on such a nascent technology is still opaque in Vietnam.
Therefore, on 15th and 16th September 2018, the first official mega public-private crypto conference in Vietnam – “Vietnam Crypto Dialogue: Cryptocurrencies & Digital Asset Dialogue (CDAD 2018)” endorsed by Ministry of Justice and Regulus, was held at InterContinental Hanoi Landmark 72. The event attracted myriad number of prominent tech and business leaders, international experts, advisors, and policymakers to discuss the latest trends in the blockchain industry, the technical development of cryptocurrencies and regulation for Vietnam.
Mr. Le Thanh Long, Minister of the Ministry of Justice delivers the opening remark
Mr. Le Thanh Long, Minister of the Ministry of Justice, indicated in his opening remarks that the proliferation of virtual currencies has gained awareness from countries all over the world and Vietnam is not an exception. Although the regulatory landscape on cryptocurrencies varies among nations depending on each state’s perspective, still, the final goal is to assure the rights and benefit for users. As such, he explained that Vietnam needs to evaluate the current legal landscape and develop regulatory framework on this emerging technology to minimize associated risks. Therefore, under the direction of Prime Minister, the key objective of this conference is to obtain international experience in terms of regulating cryptocurrencies and digital assets from worldwide experts and advisors.
From the government perspective, Mr. Phan Chi Hieu, Deputy Minister of the Ministry of Justice, shared in his keynote speech on “Cryptocurrencies and Digital Assets: Legal Issue” that currently, Vietnamese legal landscape still relies in immature stage with opaque and non-transparent regulations on virtual assets. As proof, the term “cryptocurrencies” or “virtual asset” has not been legitimately recorded in any legal documents in Vietnam, which makes the definition of these assets remain unclear. Moreover, under the current law, cryptocurrency is neither deemed as fiat money nor foreign currency. It is not recognized as legal payment method either. Thus, using cryptocurrencies in payment may be considered as a breach of law. With that circumstance, the Ministry of Justice endorses this event to consult speakers and guests on international experience and adoption approach towards cryptocurrencies. Subsequently, Vietnam can evaluate the necessity of a clear regulation framework and outline the most appropriate approach.
Starting the first session with the topic, “International Experiences in Building Legal Framework for Cryptocurrencies and Digital Assets”, Mr. Nizam Ismail, Partner and Head of Financial Services of RHTLaw, shared that by and large, cryptocurrencies on their own are not regulated in Singapore. However, the Monetary Authority of Singapore (MAS) has issued guidelines on ICOs and how it will be regulated. As a result, if the tokens are deemed to be securities, they will be regulated under Singapore’s Securities and Futures Act (SFA). Otherwise, they are largely unregulated, in which case the MAS needs to clarify what legal system can be applied and conduct anti money laundering and counter financing of terrorism (AML/CFT) requirements as well. Furthermore, Singapore has also decided to regulate cryptocurrency exchanges and cryptocurrency intermediaries.
Regarding Vietnam, RHTLaw representative expressed that in terms of shaping the regulatory framework, consultation is a must. Since these technologies are quite nascent, they will bring not just opportunities but also challenges since associated risks, gaps and potential abuse may occur. However, regulators have to bear in mind that novel technologies, such as blockchain, bring myriad benefits, not just for the financial services, but also the entire economy while ICO is an efficient way for firms to raise funds. Therefore, the government has to balance between different approaches so as not to sabotage innovation through over-regulation.
In this panel, Ms. Elizabeth Chee, COO & Co-Founder of HIT Foundation also shared about treatments on asset tokens in Switzerland. She stated that a lot of projects actually do pre-financing and they develop tokens as Minimum Viable Product (MVP), which are sold during ICOs. This is also treated as securities. The panelist from HIT Foundation also shared that in Switzerland, cryptocurrencies are exempted from VAT and as movable assets, they are exempt from capital gains tax.
Mr. Nicholas Dimitriou, Chief Legal Officer of HybridBlock, expressed in the same panel that Malta has a designated team in charge of policy making. As such, Malta-based blockchain businesses are governed by three different bills: Malta Digital Innovation Authority Act – auditing for smart contracts, ICOs and tokens; Virtual Financial Assets Act, the main act used in exchanges since it determines whether the item is financial asset, financial instruments or not; and Innovative Technology Arrangements and Services Act dealing with recognition of innovative technology arrangements and service and evaluation of license application.
He expressed that for Vietnam, the regulators need to assess how their decision might impact the whole economy. Policymakers need to ensure the growth of innovation and avoid negative reactions when they steer the industry from one jurisdiction to another. Moreover, he emphasized that there are many cases where firms in emerging industry migrate from one jurisdiction to another, where innovation is better endorsed. Thus, the regulators need to carefully consider and balance among different approaches to facilitate a nurturing ecosystem for blockchain.
Echoing Mr. Nizam Ismail’s perspective, Mr. Chionh Chye Kit, CEO of Traceto, also stated that it is meaningless to regulate the technology itself, yet the activities based on that technology should be regulated. As such, AML/CFT requirements should always be the core aspect of legal framework, regardless of how cryptocurrency is defined.
The conference entails other enticing panels and keynotes on the impact and applications of blockchain and how relevant the technology is to different industries. In the last session titled “Entrepreneurship in the Industrial Revolution 4.0: Challenges and Expectations”, Mr. Jarvis Nguyen, Co-Founder of Etheremon, a decentralized game built on the Ethereum network combined with virtual reality technology, indicated that Vietnam is positioned to take advantage of the growing opportunities presented by blockchain since decentralization, one of the unique characteristics of this technology, means that everyone are treated equally in a world without border.
“Entrepreneurship in the Industrial Revolution 4.0: Challenges and Expectations” panel
Voicing the same opinion with Mr. Jarvis Nguyen, Ms. Nicole Nguyen, Head of APAC at Infinity Blockchain Ventures stated that Southeast Asia region, especially Vietnam, is entitled to the prospect of the world’s next blockchain hub thanks to its stellar growth, vibrant ecosystem and burgeoning developer and startup founder pool. However, according to Mr. Dang Minh Tuan, Director of VietKey, since blockchain is thriving rapidly, it will bring not only opportunities but also challenges for Vietnamese businesses. Thus, companies in Vietnam have to bear in mind that they have to consciously consider their roadmap to overcome the barriers and minimize risks.
Mr. Phan Chi Hieu, Deputy Minister of the Ministry of Justice delivers the closing speech
At closing remark, Mr. Phan Chi Hieu, Deputy Minister of the Ministry of Justice, expressed that it is first and foremost to clearly define the terms “virtual asset”, “virtual currency”, “crypto assets” and “cryptocurrency” in law and regulations. He also stated that blockchain, with its unique characteristics including decentralization, security, and transparency, is being adopted in many industries and thriving across the globe. In Vietnam, one of the highlights in blockchain application refers to supply chain industry, especially food traceability and control. As such, Vietnam needs to do more research on blockchain use cases in other industries, including public sector and policy implementation.
He also accentuated that since blockchain and cryptocurrencies are nascent concepts, the regulatory framework is still obscure. Thus, clear regulation is a must since it will act as a precedence for adoption plan. However, government will deliberately consider how and to what extent they regulate these novel technologies to ensure the growth of the economy and control associated risks as well as malicious behaviors. The Deputy Minister also expressed that Ministry of Justice will research, collect experiences and study the roadmap for blockchain adoption of other countries to propose the most ideal solution to the Prime Minister so as to support the development of blockchain in Vietnam.
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