Following in the footsteps of its Southeast Asian neighbors, Vietnam is laying the groundwork for new regulations covering the young fintech and cryptocurrency businesses in their country.
During a March meeting of the Vietnam Fintech Club, a non-profit organization composed of local entrepreneurs and startup founders, it was announced that the Asian Development Bank (ADB) had committed a substantial amount of funding to reforming Vietnam’s long-established banking regulations.
Vietnam Needs a Modern Set of Rules
Vietnam is notable in the region for maintaining tight foreign currency controls on its residents, in the form of extensive reporting and documentation. Any outbound money transfers must be accompanied by documents explaining the purpose and identifying the recipient with great detail.
The country’s broader policies on foreign currency will likely not see any changes, however. Indeed, the steering committee formed by the State Bank of Vietnam (SBV) for this new collaboration with the ADB will focus only at the fintech industry, its technology, and its constituents.
These initial steps echo similar research activities amongst regulators in the Philippines from as far back as 2015. The Philippine effort culminated in new AML and KYC guidelines and reporting requirements for cryptocurrency exchanges operating within the archipelago, which officially took effect in March of this year.
Meanwhile, the Monetary Authority of Singapore (MAS) issued a draft of a revision of their national payments and remittance framework, soliciting feedback from the industry in late 2016. MAS has not yet released a final version of the document, and Singaporean entrepreneurs continue to wait for the regulatory clarity that the new guidelines would potentially provide.
Crypto MLMs and Ponzis Damage Bitcoin’s Reputation
The Vietnam Fintech Club now operates under the purview of the Vietnam Bankers Association (VBA) and spearheads advocacy and education in a market that is admittedly still quite raw. As seen in many other countries, crypto-related MLMs and ponzi schemes operating within Ho Chi Minh city damage the legitimacy of real blockchain businesses vying for the same mindshare.
“People tend to confuse these for Bitcoin,” explained Robert Vong, cofounder of Blockfin Asia, a local fintech industry advocate and one of the club’s key members.
Well-known multinational scams such as Onecoin and Bitkingdom are particularly prevalent, and one of the club’s goals is to curtail their impact on the uninitiated public. Having the support of both the ADB and the VBA when speaking out about these scams, according to Vong, lends “credibility to our words with the media.”
Regulation often comes in fits and starts in the developing world, with bureaucracy and legacy processes sometimes forming insurmountable roadblocks to real progress. Vietnam’s experience is not altogether unique in that it has taken a few years to get to this stage, and yet the final outcome remains difficult to predict.
However, Vong notes that the ADB’s financial commitment changes things substantially. “It’s different now,” he said.
Do countries like Vietnam need this kind of regulation to protect cryptocurrency’s reputation? Let’s hear your thoughts.
Images via ADB, Pixabay