Is Web3 on the rise in Vietnam? Regulatory uncertainty remains a major challenge

Web3 marks a new era for the Internet, and Vietnam is at the forefront of this wave of change.

There are many reasons why Vietnam is keen on Web3. Such as the country’s tech-savvy populace, booming tech industry, government initiatives, and widespread interest in blockchain and cryptocurrencies. We raise this question: Is Web3 on the rise in Vietnam?

Is web3 in Vietnam on the rise?

According to a research report by tiger-research, among Asian countries, Vietnam has made outstanding achievements in the development of the Web3 industry in the past two years. This development is based on three main factors

(1) Vietnam has a large young population who are interested in new technologies and have a high technical level. This provides a good talent base for the development of Web3 technology.

(2) High Internet penetration rate: Vietnam’s Internet penetration rate ranks among the best in Southeast Asia, creating favorable conditions for the promotion and application of Web3 technology.

(3) Active start-ups: Vietnam’s entrepreneurial ecosystem is increasingly mature, and many start-ups have become involved in blockchain and Web3 technologies, promoting innovation and development in this field.

On September 29, 2023, the "Blockchain Technology in the Digital Economy" jointly organized by the Committee on Science, Technology and Environment of the National Assembly of Vietnam and the Vietnam Blockchain Association Application" seminar was held in Hanoi. At the seminar, Le Quang Hui, Chairman of the Science, Technology and Environment Committee of the Vietnamese National Assembly, emphasized the global application of blockchain in various fields such as finance and energy. He also predicts that the blockchain industry will be worth trillions of dollars by 2030.

Vietnam is slowly but surely changing its stance on blockchain and cryptocurrencies. Although there are no concrete legal documents yet, recent government actions indicate that positive changes will occur in this area.

The beginning of blockchain-related regulatory changes in Vietnam

However, the Vietnam Web3 market faces multiple challenges. The most prominent is the uncertainty surrounding the regulation of cryptocurrencies, which has severely affected their business environment. Additionally, a lack of in-depth development skills and insufficient retail liquidity are major obstacles Vietnam faces in global Web3 competition. These challenges are important considerations for Vietnam to become a global leader in the Web3 industry.

Vietnam’s Ministry of Finance has raised the possibility of banning or regulating virtual assets by May 2025 as part of strengthening anti-money laundering (AML) efforts, according to a report by TheRegister.

The action plan aims to get Vietnam off the "grey list" of the Financial Action Task Force (FATF). FATF is an intergovernmental anti-money laundering organization established by the G7.

FATF’s gray list includes countries that have committed to addressing identified obstacles to combating money laundering, terrorist financing and proliferation financing within a certain period of time. Countries included on the list will be subject to enhanced monitoring.

The sixth action of Vietnam’s National Action Plan states that the country will not only develop a legal framework to “prohibit or regulate virtual assets and virtual asset service providers” but will also “demonstrate the implementation of regulations, including ensuring Compliance Measures”.

In September 2023, the Vietnam Bankers Association and the Vietnam Blockchain Association co-organized a conference in Hanoi that focused on strengthening laws and regulations to prevent cryptocurrency transactions from being compromised. of money laundering.

Nguyen Quoc Hung, Vice Chairman and Secretary-General of the Vietnam Bankers Association, stressed the importance of the Anti-Money Laundering Law and its related guidelines that will come into effect in March 2023. He pointed out that the imperfect legal framework and the lack of professionals in the digital and cryptocurrency field have confused banks and state regulatory agencies when handling cases involving new asset types. An in-depth discussion of anti-money laundering is the beginning of many future blockchain-related regulations and is of great significance.

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