Vietnam may ban virtual assets to fix its bad rep for money laundering

Hopes to get itself off an international naughty list – as you would when you want foreign investment in your chip sector

Vietnam's Ministry of Finance has raised the prospect of prohibiting or regulating virtual assets by May 2025, as part of a drive to boost anti-money laundering (AML) efforts.

The 17-point action plan is aimed at getting Vietnam off a "gray list" maintained by the Financial Action Task Force (FATF) – an intergovernmental anti-money laundering organization founded by the G7 bloc.

FATF's gray list includes countries that have committed to resolve identified obstacles to counter money laundering, terrorist financing, and proliferation financing within a certain timeline. Being on the list subjects the country to enhanced monitoring.

The sixth action on Vietnam's national action plan states the country will not only develop a legal framework to "prohibit or regulate virtual assets and virtual asset service providers," but also "demonstrate enforcement of regulations including measures to ensure compliance."

To date, Vietnam has no legal framework for owning, trading or using virtual assets – but does not recognize cryptocurrency as legal tender. Crypto transactions in Vietnam are typically completed using international trading platforms or direct arrangements.

Vietnam placed third in Chainalysis's global crypto adoption index.

But Vietnam would prefer to be more known for other things – like being a semiconductor industry hub. The country has promised investment incentives for that industry, and other tech-related fields.

Being gray listed by the FATF is not the sort of thing that typically attracts foreign investors considering where to place their next bets.

Government officials have been urging action to regulate crypto for at least two years.

Other items in the national AML plan include enhancing cooperation in extradition, development of outreach activities and private sector guidance, and demonstrating improved monitoring of local financial institutions.

Vietnam isn't the only country moving to regulate virtual assets to keep the FATF happy. In May of last year, Pakistan's minister of finance declared crypto would never by legalized in Pakistan for the same reason. ®

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