Vietnam Legalizes Crypto Assets With New Digital Technology Law

Vietnam has made a significant stride in legitimizing and regulating its digital economy with the passage of the Law on Digital Technology Industry, the country's first comprehensive legal framework recognizing crypto assets. This legislation not only distinguishes between virtual and crypto assets but also aligns Vietnam with global anti-money laundering standards, potentially facilitating its removal from the Financial Action Task Force’s (FATF) gray list.

Vietnam’s inclusion on the FATF gray list since 2023 has posed compliance challenges for local financial institutions and heightened scrutiny of cross-border transactions. The National Assembly approved the Law on Digital Technology Industry on June 14, with implementation slated for 2026. This law is part of a broader initiative to foster innovation in emerging technologies such as artificial intelligence and semiconductors, while providing clearer regulations for the crypto sector after years of regulatory uncertainty.

The law defines crypto assets as digital assets that use encryption or similar digital technologies for validation during creation, issuance, storage, or transfer. It establishes clear distinctions between different categories of digital assets, excluding securities and fiat currencies from the crypto asset definition. The legislation creates separate categories for virtual assets, which are used for exchange or investment, and crypto assets, which use encryption technology to validate transactions and ownership.

The government retains the authority to develop detailed classifications, business conditions, and management protocols for digital assets. Regulatory bodies must implement cybersecurity measures to prevent the proliferation of weapons, money laundering, and terrorism financing, in compliance with global best practices. The FATF has specifically recommended establishing clear virtual asset regulations as part of anti-money laundering compliance efforts.

Implementation of the law begins on January 1, 2026, providing a transition period for businesses and regulators to prepare operational frameworks. The Ministry of Science and Technology drafted the legislation as part of broader digital technology sector development initiatives. Beyond cryptocurrency regulation, the law establishes extensive incentives for digital technology enterprises and innovation programs. Special policies encourage controlled technology experimentation and shared digital infrastructure development across multiple sectors.

Local governments must implement human resource development policies for digital technology industries, particularly for key projects involving semiconductors, artificial intelligence systems, and digital technology products. Subsidies will support hiring high-quality personnel and workforce training programs. The legislation also prioritizes software production and AI data centers for investment, tax, and land-use incentives. These sectors receive formal recognition as strategic priorities under Vietnamese law.

Vietnam's new Digital Technology Law is expected to have a profound impact on the country's financial landscape. By legalizing crypto assets, the law opens up new avenues for businesses to leverage digital technologies, fostering innovation and economic growth. This move is particularly beneficial for small and medium-sized enterprises (SMEs), which can now enhance their operational efficiency and attract investment more easily. The legal recognition of cryptocurrencies also provides a sense of security for investors, who can now engage in digital asset transactions with greater confidence.

The significance of this legislation extends beyond the immediate benefits to SMEs. It signals Vietnam's commitment to embracing digital technologies and positioning itself as a forward-thinking economy in the region. The law is likely to attract more foreign direct investment (FDI) in the technology sector, as international investors seek stable and regulated environments for their digital asset ventures. This influx of investment can further drive the development of Vietnam's digital infrastructure and create new opportunities for economic growth.

Moreover, the legalization of crypto assets aligns with the global trend of digital transformation. As more countries recognize the potential of cryptocurrencies and blockchain technology, Vietnam's proactive approach sets a positive example for other nations in the region. This move can also encourage collaboration and knowledge sharing among countries, fostering a more integrated and innovative digital economy.

However, the implementation of the Digital Technology Law will require careful oversight and regulation to ensure that it achieves its intended benefits. The government will need to establish clear guidelines and mechanisms for monitoring and enforcing the law to prevent misuse and protect investors. Additionally, ongoing dialogue with industry stakeholders will be crucial to address any emerging challenges and adapt the regulatory framework as needed.

In conclusion, Vietnam's new Digital Technology Law represents a significant milestone in the country's digital journey. By legalizing crypto assets, the law paves the way for enhanced efficiency, increased investment, and economic growth. As Vietnam continues to embrace digital technologies, it is poised to become a leader in the region's digital economy, driving innovation and attracting investment from around the world.