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Jun 06, 2024 / 21:13

Digital assets should be taxed like lottery winnings in Vietnam: experts

In 2023, the flow of cryptocurrencies into Vietnam amounted to US$120 billion.

Taxes on digital assets should be comparable to those on lottery jackpots because investing in virtual money is similar to buying lottery tickets-the jackpots are considered lucky money, Phan Duc Trung, Vice Chairman of the Vietnam Blockchain Association (VBA), suggested at the workshop on the legal framework for virtual assets and virtual asset service providers on June 5.

 Delegates attend the workshop. Photo: nld.com.vn

Speaking at the event, the Vice Chairman said that developing sets of ethical standards, community standards, and project standards and using RegTech (Regulatory Technology) to track on-chain data could help minimize fraud and scams related to virtual assets.

Echoing Trung's sentiments, delegates at the workshop said that the lack of a legal framework and specific regulations for various types of virtual assets and cryptocurrencies has kept them in the informal economy and unrecognized in mainstream financial systems.

Some participants argued that it is not feasible to ban transactions or prohibit virtual asset service providers from operating. Instead, an appropriate regulatory framework consistent with anti-money laundering standards should be enacted without delay.

At the workshop, Tran Viet Hung, Senior Advisor to the VBA, said that early issuance of a legal framework would help bring the value of virtual assets and virtual asset service providers from the informal economy to the formal economy, protect users' rights, support tax policies, and combat money laundering and terrorist financing.

He went on to say that enforcing strict management practices could help address the capital shortage businesses are facing. Securities, banks, and bond fundraising channels are all struggling to raise money, while cryptocurrency capital is flowing into Vietnam at five times the rate of FDI capital.

According to a report by US-based blockchain analytics firm Chainalysis, the flow of cryptocurrencies into Vietnam amounted to US$120 billion in 2023. Of this, around 60% of cryptocurrency in the country is currently traded on centralized exchanges (CEX). Chainalysis also estimated that the total profits of global cryptocurrency investors in 2023 would be $37.6 billion, of which Vietnam ranked third with profits of around $1.2 billion.

According to Triple A, a Singapore-licensed cryptocurrency payment company, up to 20% of the Vietnamese population owns virtual assets. In fact, the number of virtual asset owners in Vietnam is the third highest in the world.

This workshop took place in the context of the deadline for issuing the legal framework for virtual assets (May 2025) in accordance with the government's commitment to implement the National Anti-Money Laundering and Countering the Financing of Terrorism Plan to remove Vietnam from the Financial Action Task Force (FATF) grey list.

In Vietnam, regulations governing virtual assets and virtual asset service providers are fragmented across 19 legal documents, allowing widespread unauthorized fundraising, fraud, and deceptive marketing of virtual asset services, even within universities and under the guise of educational initiatives.

Under the current regulations, unauthorized virtual asset service providers operating in Vietnam risk violating Decree 13 on personal data protection by illegally collecting personal data, failing to protect personal data, and using personal data for improper purposes.

A compliance risk for virtual asset service providers arises from the fact that neither the Tax Law nor the Anti-Money Laundering Law 2022 covers the exchange of financial and real estate assets with stablecoins, coin mining, or the sale of GameFi tokens or non-fungible tokens (NFTs).

The VBA Senior Advisor hopes that when discussing virtual assets and blockchain-based asset applications at next year's workshop, the conversation will not only be about the underground economy or the rising price of bitcoin, but also about how much capital virtual assets and virtual asset service providers contribute to the economy.