Key Takeaways
On June 14, 2025, Vietnam’s National Assembly enacted the Law on Digital Technology Industry, set to take effect on January 1, 2026. This new legislative framework for cryptocurrencies is part of Vietnam’s wider initiative to comply with the Financial Action Task Force (FATF) standards, following its inclusion on the FATF gray list in 2023 due to shortcomings in Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures. The law clearly differentiates between crypto assets, such as Bitcoin and Ether, and virtual assets, which are defined as non-financial digital items, while excluding Central Bank Digital Currencies (CBDCs) and traditional securities. It also establishes mandatory identity verification, transaction surveillance, and reporting requirements aimed at combating digital asset fraud.
Vietnam’s Shift Towards Digital Asset Regulation
On June 14, 2025, Vietnam’s legislature approved the Law on Digital Technology Industry, marking a pivotal change in the country’s approach to digital assets. Effective from January 1, 2026, this legislation provides comprehensive regulations for the burgeoning cryptocurrency market in Vietnam. This move reflects Vietnam’s commitment to enhancing its financial standing and aims to remove its designation from the FATF gray list. The law lays down a robust legal framework for digital assets that encompasses asset classification, licensing prerequisites, and compliance protocols in line with international standards. By instituting these regulations, Vietnam seeks to address the FATF’s concerns, inspire confidence among investors, and establish itself as a leading digital economy in Southeast Asia. This article examines how these reforms bolster Vietnam’s strategy for reinstating its standing with the FATF, delving into the specifics of the country’s new crypto regulations and their implications.
Understanding the FATF
The Financial Action Task Force (FATF), established in 1989 by the G7 nations, is a global body that sets standards to combat money laundering, terrorist financing, and other financial system threats. The organization formulates policies for member countries and monitors their implementation. The G7 consists of seven advanced economies: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The FATF provides recommendations to shape national legislation and evaluates compliance through peer assessments. Nations failing to meet these standards risk being placed on a “gray list” or “blacklist,” which can adversely affect their global financial reputation and investment climate.
Vietnam’s Gray List Status and Financial Reform Efforts
In June 2023, Vietnam was added to the FATF gray list, officially designated as jurisdictions under increased scrutiny, due to its commitment to rectify significant weaknesses in its AML and CFT frameworks. The FATF pointed out issues such as insufficient oversight of financial institutions, inadequate Customer Due Diligence (CDD), and poor regulation of virtual asset service providers. Additionally, concerns were raised regarding Vietnam’s initiatives to combat illicit financing related to the proliferation of weapons. To achieve removal from the gray list, Vietnam must fully implement an action plan specified by the FATF, which includes enhancing AML legislation, improving regulatory oversight, and ensuring effective prosecution of financial offenses. The FATF closely monitors progress through updates and on-site evaluations, and once compliance is confirmed, member nations will vote on the country’s reinstatement.
Overview of Vietnam’s Law on Digital Technology Industry
Vietnam has made history by becoming the first country to pass a dedicated law for the digital technology sector, which was approved in June 2025 and will take effect in January 2026. The key features of Vietnam’s Law on Digital Technology Industry include ambitious targets to create 150,000 digital technology companies by 2035 under the “Make in Vietnam” initiative. The legislation distinguishes between crypto assets, like Bitcoin and Ether, and virtual assets, which are non-financial digital items, enabling more precise regulation based on risk as per FATF guidelines. Additionally, the law presents various incentives such as tax reductions, grants, and exemptions from import duties for startups, small and medium-sized enterprises (SMEs), and foreign tech investors. It also provides support for the workforce by offering five years of tax exemptions for local digital experts and facilitating five-year visas without work permits for foreign talent. Furthermore, it introduces a risk-based regulatory framework for artificial intelligence and digital assets, along with a regulatory sandbox to encourage innovation in blockchain, decentralized finance (DeFi), and virtual asset technologies.
A Detailed Analysis of Vietnam’s Crypto Legislation
The law categorizes digital assets into two distinct groups: Virtual assets, which are non-financial digital items intended for transactions or investments, and Crypto assets, which utilize encryption or blockchain technologies for issuance, transfer, and storage. Notably, this classification excludes securities, CBDCs, and traditional financial instruments, creating a structured legal framework for the regulated use of these assets while distinguishing them from conventional financial products. The government is tasked with the licensing, oversight, and operational guidelines for both categories, reflecting a commitment to transparency and compliance. The new regulations provide legal recognition for crypto startups, establishing a framework for regulation and offering tax incentives. Furthermore, provisions for pilot sandbox mechanisms for virtual asset products and services are included, along with tax exemptions, subsidies, and training programs for blockchain startups.
Addressing FATF Concerns Through Legislation
More than just a national achievement, Vietnam’s Law on the Digital Technology Industry is an essential step toward aligning the country’s digital asset sector with FATF standards on AML and CFT. Key aspects of the law include the official legalization of crypto, which eliminates any uncertainties surrounding ownership and use, thereby aligning with the FATF’s call for clear national regulation of digital assets. The law also categorizes crypto assets separately from virtual assets, allowing for more effective risk-based regulation. It brings crypto exchanges and wallet providers under state supervision, addressing FATF concerns regarding inadequate customer due diligence and illicit financial activities. Furthermore, fiat-backed stablecoins are regulated separately under existing financial legislation to ensure consistent oversight and mitigate systemic risks. This regulatory clarity not only attracts crypto startups but also facilitates the monitoring of transactions, enforcement of Know Your Customer (KYC) protocols, and reduction of capital flight. These reforms are instrumental in supporting Vietnam’s objective of exiting the FATF gray list by fostering a transparent and controlled crypto environment that adheres to international standards.
Strengthening Enforcement Against Digital Asset Fraud
The new law equips Vietnamese authorities with a comprehensive legal framework to investigate, prosecute, and deter digital asset fraud, addressing prior gaps in enforcement capabilities. This legislation introduces compliance requirements including identity verification, transaction monitoring, and reporting obligations. Recent fraud cases underscore the urgency of these reforms: in February 2025, four individuals were arrested for operating BitMiner, a fraudulent crypto mining operation that deceived 200 victims, resulting in losses exceeding 4 billion Vietnamese dong (approximately $157,300). Additionally, in December 2024, the Hanoi police intervened in a scam involving Million Smiles, which promoted a cryptocurrency named QFS through misleading advertisements, leading to losses of about $1.17 million. The law mandates AML and CFT measures, compelling crypto service providers to adopt compliance protocols including identity verification and transaction monitoring. Moreover, the law encourages enhanced collaboration with international regulators, facilitating partnerships with foreign authorities for cross-border investigations and addressing global crypto crime. By filling legal gaps and improving regulatory coordination, Vietnam has strengthened its enforcement capabilities and enhanced its reputation within the international financial community.
Embracing Digital Innovation
Vietnam’s new cryptocurrency legislation is a crucial element of its ambition to emerge as a digital technology hub in Southeast Asia. By formally acknowledging crypto assets, the government is fostering innovation and attracting global startups and investors. The law includes considerable incentives for technology companies, such as tax breaks for firms involved in blockchain, AI, and chip design, as well as subsidized access to digital campuses and innovation parks. Additionally, grants and infrastructural support for research and development in semiconductors and cloud technology are part of the initiative. To nurture this ecosystem, the government is also investing in digital education through vocational training, partnerships between universities and industries, and tech apprenticeship programs, ensuring a skilled workforce for future advancements. Collectively, these efforts aim to position Vietnam as a regional leader in digital innovation.
Vietnam’s Global Standing and Future FATF Evaluation
Vietnam’s cryptocurrency law plays a pivotal role in its strategy for FATF compliance. By clearly defining virtual and crypto assets and enforcing regulations on licensing, AML/KYC, cybersecurity, and transaction scrutiny, the country aligns itself with Recommendation 15 of the FATF, which was a significant factor in its gray listing. Concurrently, the State Bank of Vietnam has tightened its AML regulations, updated risk assessments, standardized reporting practices, and enhanced CDD requirements under the revised Circular 09. If these reforms are fully implemented by January 2026, they could pave the way for Vietnam’s removal from the gray list. A transparent regulatory framework also bolsters investor confidence, as legalized exchange operations and stringent compliance standards provide assurances to international crypto enterprises, venture capitalists, and technology firms. Furthermore, a seamless integration of crypto with traditional banking enhances access to capital markets and institutional financing. Ultimately, Vietnam’s regulatory reforms not only address FATF concerns but also improve its global image as a transparent and innovation-driven economy.
