Systemic Transformation? Understand Vietnam's Encryption Regulation and Taxation System in One Article

Introduction

For a long time, Vietnam's legal classification of cryptocurrencies has been vague, and tax policies have fallen into a "gray area", leaving market participants shrouded in uncertainty. However, this situation underwent a significant change on June 14, 2025, when the National Assembly of Vietnam passed the "Digital Technology Industry Law", which for the first time included crypto assets within the national legal framework and implemented clear regulatory classifications, officially granting them legal status, marking a milestone in the country's crypto asset regulatory process.

The new law categorizes digital assets into two types: "virtual assets" and "cryptographic assets," excluding financial instruments such as securities and digital fiat currencies. It also grants the government the authority to formulate and implement detailed regulations, while emphasizing the strengthening of cybersecurity, anti-money laundering, and counter-terrorism financing requirements. This law is set to come into effect on January 1, 2026, with the core goal of improving the relevant legal framework, aligning with international regulatory standards, and helping Vietnam to soon exit the FATF grey list.

This article will attempt to analyze the restructuring effect of this legislative breakthrough on Vietnam's digital economy landscape, examining the latest dynamics and future trends of its tax system. By outlining the evolution of policies from cautious observation to actively building a regulatory framework by the Vietnamese government over the past few years, it will conduct a comparative analysis with the practices of other representative countries in Southeast Asia and globally in the field of cryptocurrency taxation and regulation. Additionally, it will look ahead to Vietnam's strategies for balancing risk prevention and innovative development, predicting specific policies that may be introduced in the coming years, as well as the potential impact of these policies on Vietnam as an emerging digital economy.

1 Vietnam clarifies the legal status of crypto assets

Before the enactment of the "Digital Technology Industry Law", Vietnam's legal characterization of cryptocurrencies had been in a vague and constantly evolving state. Initially, the Vietnamese government's attitude towards cryptocurrencies was mainly reflected in strict restrictions on their use as a means of payment and warnings about risks. For example, the State Bank of Vietnam (SBV) clearly stated in its official letter 5747/NHNN-PC issued in July 2017 that cryptocurrencies such as Bitcoin and Litecoin are not recognized as legal tender or means of payment in Vietnam, and their issuance, supply, and use are explicitly prohibited, with violators facing administrative or criminal sanctions. Subsequently, in April 2018, the Prime Minister issued Directive 10/CT-TTg, requiring relevant departments such as the General Statistics Office, the Ministry of Finance, and the Ministry of Public Security to strengthen the management of cryptocurrency-related activities to enhance control over related transactions and prevent potential harm.

Although the Ministry of Finance announced in the 4356/BTC-TCT public letter in April 2016 that it would not prohibit cryptocurrency trading and defined it as "property" and a liquid "commodity," the lack of clear legislative support has left this directive in an ambiguous position in practical enforcement, making compliance and enforcement related to cryptocurrency trading relatively complex. Furthermore, according to Article 105.1 of the Vietnamese Civil Code of 2015, the definition of assets includes various items, currency, monetary instruments, and property rights, but digital assets such as cryptocurrencies clearly do not fall under any of the aforementioned categories. Therefore, under current Vietnamese law, these assets themselves are not regarded as physical assets. This lack of classification has created a significant legal void that directly impacts the handling and regulation of these assets within the legal framework.

However, this ambiguous situation underwent a fundamental change on June 14, 2025. The National Assembly of Vietnam passed the landmark "Law on Digital Technology Industry," which will officially take effect on January 1, 2026. This law defines "digital assets" for the first time in the Vietnamese legal system and further categorizes them into "cryptographic assets" (secured by cryptography and blockchain technology) and "virtual assets" (primarily used for trading and investment, but excluding securities, stablecoins, and central bank digital currencies). This legislative breakthrough ended years of uncertainty regarding the legal status of cryptographic assets in Vietnam, officially recognizing cryptographic assets as legitimate property under civil law, thus providing a solid legal foundation for individuals and organizations to legally establish and exercise property rights.

This strategic shift from "non-recognition" to "legalization" is not accidental, as the Vietnamese government has recognized the enormous potential of the crypto economy. Despite regulatory obstacles, Vietnam has one of the highest cryptocurrency ownership rates in the world, ranking fifth globally, with approximately 20.95% of the population holding crypto assets and annual inflows exceeding $100 billion. At the same time, Vietnam also faces the need to respond to international anti-money laundering (AML) and counter-terrorism financing (CTF) pressures, as it has been placed on the gray list by the Financial Action Task Force (FATF), which requires it to strengthen virtual asset management. Therefore, legalization is a necessary prerequisite for attracting investment, promoting the development of the digital economy, and effectively regulating this emerging industry. This indicates that the Vietnamese government has shifted from mere risk prevention to actively embracing the opportunities brought by the digital economy, and is trying to guide and regulate this emerging industry by establishing a sound legal framework, rather than simply suppressing it.

2 The shift in Vietnam's cryptocurrency regulatory framework

Vietnam's official shift in its attitude towards the classification of cryptocurrencies reflects a significant change in its regulatory system. In the past, Vietnam's cryptocurrency regulatory framework was characterized by inadequacies and a passive approach, often employing a one-size-fits-all regulatory method. However, with the rise of global cryptocurrency trends and changes in Vietnam's leadership, its cryptocurrency regulatory system is currently being rapidly improved. Not only has a preliminary division of regulatory responsibilities been established, but discussions and implementations of various regulatory pilot projects are also being vigorously advanced, aiming to effectively address challenges such as anti-money laundering (AML) and counter-terrorism financing (CFT) while embracing new technologies.

2.1 Evolution of Regulatory Framework

Vietnam's cryptocurrency regulatory framework has undergone a significant evolution from non-existence to active guidance.

From 2016 to 2022, Vietnam's cryptocurrency regulatory framework has evolved from non-existent to being established, moving from a one-size-fits-all approach to a phase of exploration and research.

In April 2016, the Ministry of Finance announced in an official letter that it would not prohibit cryptocurrency trading, but the characterization of it remained vague. Then, in July 2017, the State Bank of Vietnam (SBV) explicitly prohibited cryptocurrencies like Bitcoin as a means of payment and emphasized their illegality. In April 2018, the Prime Minister issued a directive requiring enhanced management of activities related to cryptocurrencies, while the SBV also instructed financial institutions to strengthen measures related to crypto trading, reflecting the government's early cautious and risk-averse stance.

In May 2020, the Prime Minister instructed the SBV to launch a pilot project to explore the use of blockchain in cryptocurrencies and requested research and evaluation of the pros and cons of cryptocurrencies. In March 2022, the Vietnam Blockchain Association (VBA) was established, becoming Vietnam's first legal entity focused on crypto assets, tasked with creating and nurturing a framework for cryptocurrency development. That same year, Vietnam passed anti-money laundering (AML) legislation, which came into effect in 2023, requiring institutions providing payment services to implement Know Your Customer (KYC) measures, marking an important step in its international compliance efforts. In October 2022, the Prime Minister again called for regulation of cryptocurrencies, showing the government's urgent need for standardization in this field.

After 2023, especially following the changes in Vietnam's leadership in 2024, Vietnam's regulatory attitude towards cryptocurrencies has gradually softened.

In February 2024, the Prime Minister issued Decision No. 194/QD-TTg, instructing the Ministry of Finance to draft a legal framework for virtual assets, clarifying the government's determination at the legislative level. In October of the same year, the Prime Minister signed Decision No. 1236/QD-TTg, promulgating the "National Strategy for the Development and Application of Blockchain Technology in Vietnam by 2025," with a vision for 2030, aiming to position Vietnam as a regional leader in blockchain innovation. The strategy clearly identifies blockchain as a core pillar of digital transformation and emphasizes "Made in Vietnam" blockchain platforms, indicating that the government has recognized blockchain and digital assets as important driving forces for the development of the national digital economy.

In June 2025, the "Digital Technology Industry Law" was passed, which establishes a tolerant and prudent regulatory framework from multiple aspects, including clarifying the classification of digital assets (cryptographic assets, virtual assets), mandating anti-money laundering (AML) and counter-terrorist financing (CTF) measures, introducing a licensing system, and providing incentives for emerging technologies such as artificial intelligence, semiconductors, and advanced computing, thereby promoting the broader development of the digital economy.

The maturation of the regulatory framework from "passive response" to "active guidance" is a key feature of Vietnam's policy evolution in the digital asset sector. In the early days, Vietnam's regulation of cryptocurrencies was mainly about "prohibiting them as a means of payment" and "risk warnings," representing a passive and preventive stance. However, in the last two years, from the Prime Minister's directive to research and establish a blockchain association, to the promulgation of the "Law on Digital Technology Industry" and the national blockchain strategy, the regulatory focus has clearly shifted towards actively constructing a framework that incorporates crypto assets into the national digital economy development strategy. This marks a transition for Vietnam into a more mature and pragmatic phase of digital asset regulation, where the goal is no longer just to control risks, but to unleash innovation potential by establishing a clear and predictable legal environment, attracting domestic and foreign investments, and enhancing its position in the global digital economy.

2.2 Overview of Vietnam's Existing Regulatory Framework and Division of Labor

Vietnam's current cryptocurrency regulatory framework is primarily managed by various ministries, forming a pattern of "loose regulation." Multiple key institutions, including the State Bank of Vietnam (SBV), the Ministry of Finance (MoF), the Ministry of Public Security, and the Vietnam Blockchain Association (VBA), collaborate to build and improve the regulatory framework, with specific divisions of labor detailed in the table below.

2.3 Regulatory Sandbox Pilot and Risk Compliance Construction under the New Normal

To explore the innovative applications of digital assets under the premise of controllable risks, the Vietnamese government has actively introduced regulatory sandbox mechanisms and pilot projects.

The Vietnamese government is discussing the establishment of regional and international financial centers, one key aspect of which is the introduction of a controlled testing policy (sandbox) for fintech, particularly for business models involving crypto assets and cryptocurrencies. This sandbox mechanism allows for small-scale testing of new financial technologies and business models in a controlled environment, thereby assessing their potential risks and benefits before full-scale promotion. For example, Da Nang has been authorized to pilot special mechanisms, including a project for international tourist payments using stablecoins (USDT), which is seen as an important attempt to explore the application of digital payments in the tourism industry. These pilot projects aim to accumulate practical experience to provide data and basis for a more comprehensive regulatory framework in the future.

In addition, Vietnam is actively exploring the development of a central bank digital currency (CBDC) - the digital dong. The Prime Minister of Vietnam has repeatedly called on the SBV to study the pros and cons of digital currency and to initiate a pilot cryptocurrency project based on blockchain. Although the issuance of the digital dong is still in the evaluation stage, its potential legal status and complementary role to the traditional financial system are important components of Vietnam's digital economy development.

Of course, while promoting innovation in the regulatory framework, anti-money laundering (AML) and counter-terrorism financing (CTF) compliance remain core concerns for the Vietnamese authorities, especially after being placed on the gray list by the Financial Action Task Force (FATF).

Vietnam is currently still on the "increased monitoring list" (grey list) of the Financial Action Task Force (FATF), mainly due to its deficiencies in anti-money laundering practices related to cryptocurrency. Being placed on the grey list means that the country has strategic deficiencies in combating money laundering and terrorist financing, which may affect its international financial reputation and ability to attract foreign investment. To be removed from the grey list, Vietnam must develop policies for virtual asset management and strengthen relevant enforcement.

The passage of the "Digital Technology Industry Law" is an important measure for Vietnam to respond to FATF pressure. The law explicitly requires all digital asset activities to strictly implement anti-money laundering (AML) and counter-terrorism financing (CTF) measures to enhance security and transparency. This means that future cryptocurrency exchanges and related service providers must comply with global standards such as KYC and AML, and may be required to maintain compensation funds to protect users from cyber attacks, thereby reducing the risk of financial crime.

3 Vietnam cryptocurrency tax policies and their latest developments

The evolution of Vietnam's cryptocurrency tax policy has almost synchronized with the country's regulatory policies on cryptocurrencies. In the early days, due to the vague and contradictory characterization of cryptocurrencies by Vietnamese authorities, the regulatory policies were rough and one-size-fits-all, making it unrealistic to impose taxes on cryptocurrencies. However, the rapid expansion of cryptocurrency trading volumes forced the government to confront its legal status, prompting Vietnamese authorities to research cryptocurrencies. Especially entering 2024, the government has shown a greater sense of urgency in establishing a clear legal framework.

3.1 Currently, cryptocurrency trading in Vietnam is still in a tax gray area

For a long time, due to the lack of clear legal definitions and regulatory frameworks, cryptocurrency trading in Vietnam has been in a tax gray area. As mentioned above, the Ministry of Finance's 2016 letter 4356/BTC-TCT does not prohibit cryptocurrency trading and defines it as "property" and "goods," but it does not involve specific tax regulations. Moreover, the State Bank of Vietnam (SBV) clearly stated in its 2017 letter 5747/NHNN-PC that it does not recognize cryptocurrencies like Bitcoin as a means of payment, further exacerbating legal uncertainty and making it difficult for tax authorities to effectively tax cryptocurrency activities. In addition, Vietnam's Civil Code of 2015 does not include digital assets in its definition of property, which also poses significant obstacles to the taxation and regulation of cryptocurrencies.

Compared to Vietnam's clear stock trading tax system, activities in the cryptocurrency sector have been exempt from tax obligations for a long time. This situation has made Vietnam a de facto "tax haven" in the cryptocurrency field, attracting a large number of crypto investors, but it has also led to a huge gap in government tax revenue.

3.2 New Regulations Outline Legal Framework for Taxation of Cryptocurrency

The "Digital Technology Industry Law" will officially take effect on January 1, 2026. This is a key step for Vietnam in terms of cryptocurrency tax policy. Although it does not directly issue a cryptocurrency tax law, it lays the legal foundation for future taxation. This new law, while excluding securities, stablecoins, and central bank digital currencies (CBDCs), for the first time legally defines "crypto assets" and "virtual assets." This milestone definition changes the previously ambiguous legal status of cryptocurrencies in Vietnam, making it likely to be regarded as legal property.

Against this background, the Ministry of Finance is finalizing a draft resolution on a pilot program for the issuance and trading of cryptocurrencies. This pilot will assess the feasibility of applying value-added tax (VAT), corporate income tax (CIT), and personal income tax (PIT) to cryptocurrency asset trading. The pilot program will be conducted on a small scale and will be closely monitored by national regulatory agencies to study how to determine the income from crypto assets, thereby establishing transparent regulations to avoid budget losses and protect investor rights.

There are currently various discussions regarding the proposed tax rates. One suggestion is to impose a 0.1% transaction tax on cryptocurrency transactions, similar to stock trading, which is believed to generate considerable revenue without excessively stifling market vitality. If cryptocurrencies are classified as investment assets, trading profits may be subject to capital gains tax like stocks or real estate. For businesses engaged in cryptocurrency trading, a standard corporate income tax of 20% may be required. Additionally, there are suggestions to levy a personal income tax of 5-10% on profits from non-fungible tokens, and a withdrawal fee of 1-5% on profits for foreign investors, while considering a 10% corporate income tax incentive for pilot exchanges (for the first five years), as well as exempting digital asset transactions from value-added tax to promote liquidity.

4 Outlook on Vietnam's Cryptocurrency Policy

The attitude of the Vietnamese authorities towards crypto assets has undergone a significant shift from early vigilance and restrictions to a current phase of active exploration and regulation. This change reflects a pragmatic balance between controlling financial risks (such as money laundering and fraud) and seizing opportunities for the development of the digital economy. The authorities may have realized that simply banning or ignoring crypto assets would lead to a brain drain and capital outflow, missing the chance to secure a place in the global wave of the digital economy. In fact, the Vietnamese authorities have included blockchain technology, digital assets, and cryptocurrencies in the national strategic technology list, alongside cloud computing and artificial intelligence. This indirectly indicates that Vietnam has regarded digital assets as a key element in driving the country's digital transformation and economic growth.

Based on the current development trends and the clear signals from the government, there is reason to believe that the future direction of Vietnam's cryptocurrency asset policy will continue to exhibit characteristics of "inclusive prudence." Specifically, the following predictions can be made regarding the future direction of Vietnam's cryptocurrency asset policy:

First, more regulatory details will be introduced and implemented. With the enactment of the "Digital Technology Industry Law", there will be more supporting regulations and guidance issued to clarify the licensing requirements, operational standards, consumer protection measures, etc., for cryptocurrency service providers. Regulatory sandboxes will continue to play a role, providing a controlled testing environment for new business models and technologies to accumulate experience and improve the long-term regulatory framework, ensuring that innovation occurs under controllable risks.

Secondly, the tax framework will gradually improve and come into effect. It is expected that after the implementation of the "Digital Technology Industry Law", the Ministry of Finance will accelerate the introduction of specific tax regulations, clarifying the taxation methods, rates, and collection processes for various cryptocurrency activities. The successful experience of the e-commerce platform tax system is likely to be introduced to cryptocurrency trading platforms to enhance tax efficiency and compliance. Vietnam may also formulate differentiated tax policies for different types of cryptocurrency activities and consider a combination of capital gains tax and turnover tax to achieve fairness and effectiveness in taxation.

Thirdly, digital assets will gradually integrate with the traditional financial system. The Vietnamese government will continue to promote the integration of digital assets with the traditional financial system, such as exploring the development of crypto banks, national crypto exchanges, and stablecoins to build a more modern financial infrastructure.

In conclusion, Vietnam may become a model of "compliance innovation" for the crypto economy in Southeast Asia, competing with Thailand and Malaysia in the Southeast Asian crypto market. Vietnam has a large user base for cryptocurrency and a relatively clear digital economy development strategy. The recently passed Digital Technology Industry Law and the ongoing tax pilot programs and sandbox mechanisms indicate that it is transitioning from a "gray area" to a "clear regulation." This transformation will allow it to stand out in the Southeast Asian region as a market that can embrace innovation while ensuring compliance. Vietnam's experience may provide a viable template for other emerging markets and developing countries on how to gradually establish a sound regulatory and tax system for crypto assets without stifling innovation, thereby turning the potential of the crypto market into a driving force for national economic growth.