What Are Lawful Structures for Fintech in Vietnam?

 What Are Lawful Structures for Fintech in Vietnam?

The foundation for the leap forward in all spheres of life has been established by the 4.0 industrial revolution and the explosion of the Internet. Science and technology have a direct impact on the financial sector, which is not exception.

Fintech – Financial Technology is a new type of finance that has emerged alongside traditional finance and has superior characteristics that are appropriate for the current circumstance and actual requirements. Despite the benefits of Fintech, its operation is fraught with difficulties, including legal issues.

Blockchain, big data, cloud computing, artificial intelligence, biometrics, and other technologies may be used by fintech. However, Vietnam currently lacks a comprehensive legal framework for these technologies. As a result, depending on the circumstances, laws pertaining to intellectual property, information technology, high technology, science and technology, cyberinformation security, and cybersecurity can all be enacted. In addition to ensuring the security of databases and the intellectual property that is associated with them, these regulations partially facilitate the research, development, and application of technological innovation.

Digital payment, in particular, is a big part of fintech. Non-cash payments, intermediary payment services, and the Law on Credit Institutions govern this sector. The Top state leader likewise gave Choice 316 since Walk 9, 2021, permitting the utilization of versatile cash to pay for labor and products of little worth. This is the legal basis for Fintech companies that offer digital payment services and for customers to use this method. Applications of fintech include asset management, peer-to-peer lending, and crypto currencies, all of which are not yet clearly regulated in Vietnam.

Due to the significance of establishing legal guidelines for Fintech, Official Dispatch No. 2433/VPCP-KTTH dated August 31, 2021 of the Public authority Office coordinated: “The State Bank of Vietnam chairs and coordinates with relevant agencies to continue studying and concretizing regulations on the pilot mechanism of P2P lending in the process of developing and finalizing the draft Decree on a controlled trial mechanism. Control (Regulatory Sandbox) financial technology activities in the banking sector, report to competent authorities for consideration and decision in accordance with the provisions of the Law on Promulgation of Legal Documents”.

Resolution No. was published by the government on September 6, 2021. 100/NQ-CP supporting the proposition to plan a Pronouncement on a system for controlled testing of Fintech exercises in the field of the financial area. After conducting research, the Draft Decree on the controlled trial mechanism for Fintech activities in the banking sector was published by the State Bank of Vietnam in April 2022. This draft is currently at the phase of looking for public remark and has not been endorsed. The development of the draft denotes another move toward Vietnam's lawful system for Fintech, establishing a strong starting point for the later birth of the Declaration.

The Decree on Controlled Trial Mechanism for Fintech in the banking sector will be officially issued by the government in the event that the Draft is approved. Credit institutions and financial technology companies will be able to test Fintech technology in a controlled manner as a result of this Decree. They can survey the adequacy and potential dangers while utilizing Fintech arrangements. The experiment's findings can be used to identify problems that need to be addressed in order for the legislature to pass legislation to regulate Fintech in the banking sector. If this is the case, banking will be a ground-breaking industry that will inspire Fintech regulations in other areas.

Despite the solid and quick improvement of web and its application, having a different lawful system for Fintech in Vietnam in the future is normal. Fintech lawyers in Vietnam who are interested in Fintech could also contribute by commenting on draft laws and providing clients with advice based on real-world examples. It goes without saying that the technology sector is home to some of the most successful businesses in the world. Fintech is the startup with the fastest growth rate among them. The sooner legitimate system of Fintech can be given, the better for Vietnam to gobble up amazing chances to draw in venture and find the world.

Our Fintech, banking legal counselors at Insect Legal Advisors - a law office in Vietnam will continuously circle back to the improvement of the legitimate system in Fintech in Vietnam to give updates to clients.

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How Decision 942/QD-TTg on Crypto Currency Would Partly Solve Challenges for the E-Government of Vietnam?

With the strong development of information technology, forms of online transactions has also gradually become a trend and develop strongly in Vietnam. In recent years crypto currency has created a new phenomenon for the global economy that some countries have been deploying to use such as El-Salvador. However, not all countries accept crypto currencies especially countries such as China, Russia, Thailand… are vehemently opposed to this type of crypto currency for fear of risks to the national economy. In Vietnam, there has been a number disputes involved crypto currency transactions through investment, purchase and sales, which lacked legal framework for resolving, creating challenges for lawyers, and dispute resolving authorities.

 

Fintech Lawyers in Vietnam

The State Bank of Vietnam also has a document prohibiting credit institutions from using crypto currency as a currency or means of payment. However, besides the potential risks, crypto currencies with the advantages of being extremely fast, convenient features which only need an Internet connection and wide application scope should be exploited. Recently, the Prime Minister issued Decision 942/QD-TTg dated June 15, 2021 approving the Strategy for E-Government Development towards Digital Government in the period of 2021 – 2025, with orientation to 2030 pilot using crypto currency. Specifically, the Prime Minister assigned the State Bank to assume the prime responsibility for researching, building and piloting the use of crypto currency based on “blockchain” technology. This is considered a bold step, but it is suitable for the context that illegal “underground” crypto currency exchanges are sprouting up and also opening up a lot of potential for the country’s economy.

In fact, in recent years, although the state has issued a document not to recognize crypto currencies, the opening and operation of illegal crypto currency trading platforms  are still common which many Vietnamese people participate. The demand for Vietnamese people to own crypto currency is quite high which crypto currency when approved by the Government will be positively received by Vietnamese people. On the other hand, recently crypto currency has appeared in the media with incidents relating to scams, illegal trading platforms which are not protected by law. But in another aspect, crypto currency transactions also help users perform many purposes such as Hence the Decision 942/QD-TTg issued timely, although still in the testing phase, would partly solve the needs of the economy as well as create strict management and control to protect people. In addition, with the pilot recognition of crypto currencies under the management of the state, it also opens up opportunities for Vietnam to promote the development of new technologies in the e-Government development strategy towards digital government.

Some positive aspects can be mentioned when crypto currency is allowed to be used such as creating convenience in transactions. Specifically, users do not have to go through any stage or intermediary and are not limited, regardless of time and location during the transaction.

Decision 942/QD-TTg also poses many challenges for the Government in management and control. With the “mobility” characteristic, the control of “virtual currency” is not simple, especially for the country which is not yet a highly developed in information technology. Therefore, in order to put “virtual currency” into use, it is necessary to ensure the development of the corresponding technology platform, and at the same time to build a strict legal framework to minimize risks for users. On the other hand, if the “virtual currency” is not well controlled, it will become a money laundering tool, transnational money transferred from illegal co-economic activities such as smuggling, opium, terrorist financing… Another important issue is that our country’s Internet system is still unstable. Therefore, in order to be able to circulate virtual money conveniently, it is necessary for Vietnam to further develop the Internet system to ensure stability in transactions.

The crypto currency in Decision 942/QD-TTg shows the Government’s aspiration for innovation and determination in moving closer to the goal of national financial inclusion and a digital economy. However, the implementation needs to have a roadmap and orientation as well as a strong legal foundation to ensure effective implementation. Our fintech lawyers in Vietnam at ANT Lawyers – law firm in Vietnam will always follow up with development of legal framework in crypto currency and blockchain technology in Vietnam to provide update to clients.

 

Read More

How Decision 942/QD-TTg on Crypto Currency Would Partly Solve Challenges for the E-Government of Vietnam?

With the strong development of information technology, forms of online transactions has also gradually become a trend and develop strongly in Vietnam. In recent years  crypto currency has created a new phenomenon for the global economy that some countries have been deploying to use such as El-Salvador. However, not all countries accept crypto currencies especially countries such as China, Russia, Thailand… are vehemently opposed to this type of crypto currency for fear of risks to the national economy.  In Vietnam, there has been a number disputes involved crypto currency transactions through investment, purchase and sales, which lacked legal framework for resolving, creating challenges for lawyers, and dispute resolving authorities.

 

Fintech Lawyers in Vietnam

The State Bank of Vietnam also has a document prohibiting credit institutions from using crypto currency as a currency or means of payment. However, besides the potential risks, crypto currencies with the advantages of being extremely fast, convenient features which only need an Internet connection and wide application scope should be exploited. Recently, the Prime Minister issued Decision 942/QD-TTg dated June 15, 2021 approving the Strategy for E-Government Development towards Digital Government in the period of 2021 – 2025, with orientation to 2030 pilot using crypto currency. Specifically, the Prime Minister assigned the State Bank to assume the prime responsibility for researching, building and piloting the use of crypto currency based on “blockchain” technology. This is considered a bold step, but it is suitable for the context that illegal “underground” crypto currency exchanges are sprouting up and also opening up a lot of potential for the country’s economy.

In fact, in recent years, although the state has issued a document not to recognize crypto currencies, the opening and operation of illegal crypto currency trading platforms  are still common which many Vietnamese people participate. The demand for Vietnamese people to own crypto currency is quite high which crypto currency when approved by the Government will be positively received by Vietnamese people. On the other hand, recently crypto currency has appeared in the media with incidents relating to scams, illegal trading platforms which are not protected by law. But in another aspect, crypto currency transactions also help users perform many purposes such as Hence the Decision 942/QD-TTg issued timely, although still in the testing phase, would partly solve the needs of the economy as well as create strict management and control to protect people. In addition, with the pilot recognition of crypto currencies under the management of the state, it also opens up opportunities for Vietnam to promote the development of new technologies in the e-Government development strategy towards digital government.

Some positive aspects can be mentioned when crypto currency is allowed to be used such as creating convenience in transactions. Specifically, users do not have to go through any stage or intermediary and are not limited, regardless of time and location during the transaction.

Decision 942/QD-TTg also poses many challenges for the Government in management and control. With the “mobility” characteristic, the control of “virtual currency” is not simple, especially for the country which is not yet a highly developed in information technology. Therefore, in order to put “virtual currency” into use, it is necessary to ensure the development of the corresponding technology platform, and at the same time to build a strict legal framework to minimize risks for users. On the other hand, if the “virtual currency” is not well controlled, it will become a money laundering tool, transnational money transferred from illegal co-economic activities such as smuggling, opium, terrorist financing… Another important issue is that our country’s Internet system is still unstable. Therefore, in order to be able to circulate virtual money conveniently, it is necessary for Vietnam to further develop the Internet system to ensure stability in transactions.

The crypto currency in Decision 942/QD-TTg shows the Government’s aspiration for innovation and determination in moving closer to the goal of national financial inclusion and a digital economy. However, the implementation needs to have a roadmap and orientation as well as a strong legal foundation to ensure effective implementation. Our fintech lawyers in Vietnam at ANT Lawyers – law firm in Vietnam will always follow up with development of legal framework in crypto currency and blockchain technology in Vietnam to provide update to clients

 

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