While blockchain applications receive a lot of attention from businesses and investors in Vietnam, it is necessary to build a more formal legal framework and promote blockchain education to exploit the economic potential of the steam sector.
Surf on the global wave
According to DataLight’s statistics in 2019, Vietnam ranked 8th on the cryptocurrency activity rankings with 2.5 million monthly trading activities on global exchanges.
In addition, blockchain startups have raised more than $ 150 million thanks to public offerings of tokens (crypto assets or digital coins), instead of following the path of traditional financing adventure.
According to the sharing of Dr. Nguyen Thanh Binh – Lecturer, Acting Chairman of RMIT Vietnam Finance Program, at a recent seminar organized by the Ministry of Justice, “Although in Vietnam, blockchain receives initial capital from large investment, the application of this technology is still quite meager ”.
The seminar focused on discussing the legal framework for blockchain-based applications and services, continuing from the high-level conference in September 2019, also chaired by the Ministry of Justice with the participation of speakers from Blockchain Innovation Center and RMIT University Center for Digital Excellence.
In his presentation, Dr. Nguyen Thanh Binh stated that blockchain application is hampered by a number of frauds due to the lack of a formal legal framework. According to the 2019 report of Asia Blockchain Review, Vietnamese investors lost over 700 million dollars due to fraudulent multi-level marketing based on Bitcoin.
One of the missing pieces is education about blockchain RMIT University Vietnam will contribute to addressing this gap by teaching about crypto finance and cryptocurrencies, as well as the blockchain economy at the Faculty of Business and Administration in the near future.
The new courses will equip students with financial and economic tools to evaluate blockchain applications such as Bitcoin and Ethereum in these areas.
RMIT University was ranked 3rd globally for advanced innovation achievements thanks to a combination of economic and technological research, according to Kaiko, a provider of data on the crypto rating market.
Dr. Nguyen Thanh Binh emphasized the importance of education and a legal framework for blockchain in his presentation to the Ministry of Justice.
Solve legal challenges
Dr. Binh said that Vietnam really needs a legal framework capable of promoting the application and innovation of blockchain products while protecting consumers and investors from fraudulent activities.
Dr. Binh advocates the use of a sandbox (pilot legal framework) for blockchain as a playground for small-scale testing with selected service providers and under the close supervision of regulatory authority. This model is being promoted in some Asian economies.
Since 2016, the Central Bank of Singapore has established a pilot sandbox legal framework for financial technologies, including blockchain. Capital market service provider on the iSTOX blockchain platform has just completed the sandbox requirements and became the first licensed fully licensed platform in Singapore to be issued and traded digital securities.
The Japanese government has also implemented a sandbox mechanism since June 2018 to promote new business models and technologies. A number of innovative startups have been taking advantage of this mechanism to harness the power of blockchain.
The Bank of Thailand has put the sandbox to the test of blockchain application in guarantee letters and inter-country transfer transactions since the end of 2017.
In general, businesses participating in the sandbox can operate with exemptions and special privileges. After successful sandbox testing and leaving the pilot legal framework, businesses must fully comply with relevant laws and regulations.
The main benefit of the sandbox mechanism is that regulators can quickly adjust and configure the monitoring framework based on the knowledge gained from here.
Prospects of sandbox application in Vietnam
The Vietnamese government has been actively exploring the use of sandboxes recently. In early January 2020, the Government’s Resolution No. 01 / NQ-CP on the implementation of the socio-economic development plan in 2020 set out the task of issuing a sandbox for financial technologies in operation. Bank and cashless payments.
Previously, the Prime Minister’s Decision No. 999 / QD-TTg of August 12, 2019, proposed the implementation of a sandbox mechanism with new technologies for the sharing economy.
“This shows a high determination from the Government. The next thing to do is to prepare all the necessary elements to deploy the sandbox, ”Dr. Nguyen Thanh Binh said.
This task includes tasks such as setting goals, allocating resources and developing criteria for selecting businesses to join the sandbox. The space, time and scale of each sandbox should also be clearly defined. In addition to the pilot legal framework, Vietnam also needs to develop a well-established ecosystem to accelerate the adoption of blockchain.
“New blockchain technology is just over 10 years old, new applications and products are constantly appearing. That’s why the ecosystem needs to be updated regularly, ”said Dr. Binh.
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