HÀ NỘI — In the past year, an estimated hundreds of billions of dollars have flowed into Vietnam’s cryptocurrency sector. However, the absence of a comprehensive legal framework to regulate this influx poses risks of tax evasion and potential money laundering.
Lina Nguyễn, Business Development Director at Exness Investment Bank, highlighted that the cryptocurrency market’s previous dormant phase has ended. She observed a resurgence in positive signals, with a notable increase in institutional investors entering the space.
Nguyễn anticipates continued growth in digital asset investments. While financial institutions show growing interest, retail investors remain cautious. In the first few months of this year alone, over $1.2 trillion was invested in digital asset exchange-traded funds (ETFs).
US blockchain analysis firm Chainalysis forecasts that the positive momentum seen in 2023 will persist into 2024. This optimism is supported by the US approval of spot Bitcoin ETFs and increasing institutional participation.
Vietnam holds the third spot globally for the number of cryptocurrency holders. Data from the Crypto Crunch App reveals that 26 million Vietnamese own cryptocurrencies, a figure five times higher than those with stock trading accounts.
Research by Dr. Nguyễn Nhật Minh and Dr. Thái Trung Hiếu from RMIT University indicates that cryptocurrency owners in Vietnam are demographically diverse, including young professionals, tech enthusiasts, and small business owners seeking alternative investments.
Chainalysis reports that up to $120 billion in cryptocurrencies entered Vietnam in the year leading up to June 2023. Vietnamese investors earned $1.18 billion in profits last year, positioning the country among the top five Asian markets with the highest returns from cryptocurrency investments, alongside China, Indonesia, India, and South Korea.
Dr. Phạm Anh Khôi, Vice Chairman of the Fintech Application Committee at the Vietnam Blockchain Association, referenced a Boston Consulting Group report that estimates the global market for tokenized real-world assets (RWAs) could reach $16 trillion, or 10 percent of global GDP, by 2030. Standard Chartered projects this market could double to $30 trillion within the next four years.
Digital assets, especially RWAs, offer low-cost and efficient funding options for projects with tangible assets. This presents a valuable opportunity for developing countries like Vietnam to participate in the global capital market. The cryptocurrency influx over the past year was nearly five times greater than foreign direct investment (FDI) into the country.
Despite the appeal of digital assets for investment and fundraising, they carry high risks due to significant volatility and a prevalence of fraudulent projects. This makes the market unsuitable for uninformed investors.
Experts emphasize the urgent need for a regulatory framework to manage the digital asset market effectively. Proper regulations could harness the potential of these funds for economic growth, preventing them from being lost to the shadow economy.
As interest in digital asset ownership and investment grows, the need for consumer protection regulations and market transparency becomes increasingly important. Measures to prevent fraud and combat cyber threats are crucial. Implementing strict regulations could help build investor confidence and encourage broader participation in the cryptocurrency market.
An unregulated cryptocurrency market could also threaten financial stability in Vietnam. Without adequate oversight, risks such as money laundering and terrorism financing could escalate.
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