Despite being one of the most enthusiastic users of digital currencies, Vietnam is not the most welcoming country for cryptocurrency and blockchain companies. Thousands of digital currency companies formed in Vietnam have their legal headquarters abroad, according to a recent study by local news site VnExpress.
According to the research, these businesses are most typically formed in Singapore, Malaysia, or Hong Kong, even though they operate and employ most of their employees in Vietnam. According to the research, the regulatory situation in Vietnam frequently leaves them with little alternative.
Several startup executives who spoke with the news organization expressed their dissatisfaction with the scenario in Vietnam. They claim that the government lacks a well-defined legal framework for forming a digital currency corporation. Vietnam also places various barriers in the way of digital currency entrepreneurs seeking foreign finance.
According to Nguyen Thanh Trung, CEO of Sky Mavis, the company behind Axie Infinity, companies like his favor Singapore because of its contrast to Vietnam. Clear rules control both blockchain enterprises and investors in Singapore, allowing startups to thrive.
The trend is concerning for the country, which has a thriving blockchain gaming industry. According to Fortune, blockchain gaming businesses have entered the Southeast Asian country, driven by the success of Axie Infinity. Over 1,000 blockchain gaming firms exist in Vietnam, with about ten valued at more than $100 million.
Vietnam is still working on a digital currency regulatory framework
Meanwhile, the Vietnamese government has set out to remedy the problem. In March, a decree issued by deputy prime minister Le Minh Khai gave the Finance Ministry new authority to build a regulatory framework for digital currencies.
The instruction directed the Finance Ministry to review existing technical and financial rules for the digital currency business and propose new ones if needed.
Vietnam is also considering issuing a digital currency issued by the central bank (CBDC). The exploration will be carried out by the State Bank of Vietnam from 2021 to 2023 to further the country’s e-governance aims. The CBDC has the potential to accelerate the expansion of digital payments in Vietnam.