Tiếng Việt
中文 (中国)
According to Decision 194/QĐ-TTg dated February 23, 2024, issued by the Government, which outlines the national action plan to implement Vietnam’s commitments on combating money laundering, terrorism financing, and financing the proliferation of weapons of mass destruction, the Government has assigned the Ministry of Finance to research and develop a legal framework to either ban or manage virtual assets by May 2025.
In an official announcement during the National Assembly session in October 2022, the leaders of the State Bank of Vietnam affirmed that virtual assets, such as Bitcoin and Ethereum, do not have a specific definition or concept within Vietnam’s legal system. These assets are not recognized as currency issued legally by central banks but are created by organizations and individuals using algorithms on computer networks.
These virtual currencies and assets are only recognized as payment methods within certain communities, such as gaming, technology platforms, or investment and financial communities. Different countries have various policies and management methods regarding virtual assets.
Global Approaches to Virtual Assets
- Countries without or with limited legal regulations on virtual assets: Vietnam, among other countries, currently lacks comprehensive legal regulations concerning virtual assets.
- Countries that have legalized transactions involving virtual assets: The United States, Canada, and the United Kingdom have legalized trading of virtual assets like Bitcoin and other cryptocurrencies.
- Countries with strict bans on virtual assets: Some countries, such as China, Qatar, and Saudi Arabia, have imposed absolute bans. Others, like Zimbabwe, have partial restrictions. These nations are concerned about the volatility and decentralized nature of virtual assets, which are not internationally recognized and could threaten national monetary systems, providing opportunities for dangerous activities like money laundering, terrorism financing, and fraud.
At present, Vietnam does not have specific policies on virtual assets. The country is in the process of researching and developing a legal framework to either ban or manage virtual assets by May 2025.
Legal Definition of Assets in Vietnam
In Vietnam, the concept of ‘assets’ was first defined in the legal system during the period from 1858 to 1945, heavily influenced by French law. After independence, Vietnam recompiled its legal documents regulating assets. The concept of assets was officially defined in the 1995 Civil Code, subsequently amended in 2005 and the latest in 2015 under the Civil Code 2015 (No. 91/2015/QH13).
Article 105 of the Civil Code 2015 defines assets as objects, money, valuable papers, and property rights. For virtual assets (commonly known as ‘virtual currency’, ‘electronic money’, ‘digital money’, etc.) to be recognized as assets, they must meet the basic characteristics of assets, i.e., they must fall into one of the four categories defined above.
If virtual assets do not fall under one of these four forms, they are not recognized as assets under Vietnamese law.
Virtual Assets as Physical Objects
Although not explicitly defined in the 2015 Civil Code and related legal documents, physical objects are understood to be tangible entities that exist in a physical form, can be touched and held, and are directly perceptible by human senses.
Objects, as a type of asset, must be held by individuals and can be used as tools for conducting civil transactions in the real world, as opposed to non-material concepts or those in the mental realm. Therefore, virtual assets, which exist as data sequences or blockchain records in the non-material electronic world, do not align with the concept and scope of physical objects in Vietnam.
When trading virtual assets, the transfer of virtual assets essentially involves transferring the intangible value of a non-material existence without the presence of physical items in the material world. Thus, among the four types of assets, considering virtual assets as physical objects is the least likely possibility.
Virtual Assets as Money
On August 21, 2017, the Prime Minister of Vietnam issued Decision No. 1255/QĐ-TTg on “Approving the Project to Complete the Legal Framework for Management and Handling of Virtual Assets, Cryptocurrencies, and Electronic Money.”
Accompanying this Decision was an official announcement from the State Bank of Vietnam stating that according to current monetary and banking regulations, Bitcoin and similar cryptocurrencies are not recognized as money and are not legal payment methods in Vietnam.
The issuance, provision, and use of virtual currencies, electronic money, or virtual assets, such as Bitcoin, as payment methods are prohibited.
From an economic perspective, the concept of money is generally understood in the market as fiat currency issued by a central bank or a monetary authority of a country, such as the State Bank of Vietnam or the Federal Reserve (FED) of the United States. Consequently, Vietnam cannot classify virtual assets as money because, during transactions involving virtual assets, there is currently no mechanism to verify the identity of the asset owner, especially when the owner is anonymous.
This viewpoint was reaffirmed by the leaders of the State Bank of Vietnam during a question-and-answer session at the National Assembly in October 2022. They stated that virtual currencies and assets (also known as cryptocurrencies) like Bitcoin are not fiat currencies issued by central banks but are created by organizations and individuals using algorithms on computer networks.
Virtual assets used for transactions, such as Bitcoin and Ethereum, are only recognized within certain communities. The governments of these communities may not have regulations to manage and control virtual asset transactions, leading to mostly “underground” transactions without legal protection.
Currently, only El Salvador and the Central African Republic recognize Bitcoin as legal tender for transactions.
Virtual Assets as Valuable Papers
According to Clause 1, Article 2 of Circular 01/2012/TT-NHNN, valuable papers are evidence confirming a debt repayment obligation between the issuer of the valuable papers and the holder within a specified period, with interest payment conditions and other conditions.
Common types of valuable papers include promissory notes, checks, government bonds, corporate bonds, treasury bills, and various securities such as shares, fund certificates, subscription rights, and investment capital contribution contracts.
As principal instruments of banks and financial institutions in market transactions, valuable papers are valued in money and can be transferred on civil trading platforms.
According to Official Letter 141/TANDTC-KHXX dated September 21, 2011, from the Supreme People’s Court of Vietnam, virtual assets cannot be considered valuable papers. This is because virtual assets do not fit the scope of valuable papers like government bonds, corporate bonds, shares, promissory notes, checks, and other negotiable instruments.
Virtual Assets as Property Rights
According to Article 115 of the 2015 Civil Code, property rights are monetary-valued rights, including intellectual property rights, land use rights, and other property rights. This implies that the property rights of a party are a combination of their rights and interests in controlling and managing assets under their ownership. A typical example of property rights is the right of an intellectual property owner or the land use right in real estate.
Unlike the other three types of assets, classifying virtual assets as property rights is not entirely impossible and depends on the type of virtual asset being considered. Clarifying the nature of virtual assets, such as their purpose, method of creation, transaction volume, and direct connection to real-world assets, is necessary to assess the feasibility of recognizing virtual assets as property.
Although the classification of virtual assets as property rights is a potential approach, virtual assets are not currently recognized as assets in Vietnam. This lack of recognition exists despite some shared characteristics between virtual assets and recognized property rights, such as monetary value and the ability to establish and transfer ownership.
In some developed countries, virtual assets have been regulated or proposed to be regulated as a type of property right. For instance, in Germany, Bitcoin is gradually being recognized as a type of asset because it meets the definition of property rights due to its economic value, transparency, and public nature through blockchain technology, which is not controlled by any organization or state.
However, the German experience may not necessarily be applicable in Vietnam due to different perspectives and policies on virtual assets. Instead of trying to fit virtual assets into the existing four types of assets defined by Article 105 of the 2015 Civil Code, it may be more appropriate to consider virtual assets as a new type of asset altogether.
Should Virtual Assets be Banned or Legalized?
Despite not being legally recognized, virtual asset transactions continue to be conducted frequently in Vietnam through international exchanges or direct agreements, posing risks related to money laundering and market instability.
The National Assembly has repeatedly urged the Government to establish a specific legal framework for virtual asset transactions. The Government has tasked relevant ministries and agencies with researching and drafting a law or legal framework to either ban or manage virtual assets by May 2025, as outlined in Decision 194/QĐ-TTg.
According to the Vietnam Blockchain Association in September 2023, from October 2021 to October 2022, the value of cryptocurrencies received in Vietnam reached nearly USD 91 billion, with illegal activities accounting for about USD 956 million.
Despite the ban, China ranked fourth globally in terms of cryptocurrency earnings in 2023, highlighting that prohibitions do not effectively restrict virtual asset transactions. This suggests that Vietnam should consider implementing strict regulations for virtual asset transactions rather than outright bans.
Two popular viewpoints have emerged in public consultations:
- Virtual assets should not be recognized as assets and should be banned to mitigate associated risks.
- Virtual assets should be considered for recognition as a type of asset, and their market should be encouraged to develop within a regulated framework.
The analysis supports the second viewpoint: establishing a comprehensive legal framework for virtual assets in Vietnam rather than prohibiting them.
Virtual assets share several important characteristics with recognized assets and thus warrant specific legal regulations. For example, cryptocurrencies like Bitcoin have significant value, serve as payment methods, and facilitate capital mobilization similarly to securities. They are recognized by several international organizations and countries like El Salvador and the Central African Republic.
Moreover, virtual assets have high security features. For instance, each Bitcoin is tied to a private key. When a transaction occurs, the Bitcoin is recorded with a new key, and the old owner’s key becomes invalid. This ensures that each Bitcoin can only have one owner at a time, providing safety to Vietnam’s financial system if legalized.
Legalizing virtual assets would also mitigate risks like money laundering, speculation, and market manipulation. Furthermore, it would enable the government to tax, enforce judgments, and criminalize actions related to virtual assets, addressing the current legal loophole where virtual assets cannot be handled by the courts.
Recognizing virtual assets would also provide legal security for investors, reducing negative impacts on the community and preventing scams, corruption, and money laundering.
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