Untangled laws crucial for blockchain

Blockchain technology is being strongly applied in the gaming industry. Play-to-earn games based on non-fungible tokens (NFT) provide an opportunity for common individuals to understand how blockchains and cryptocurrencies work, particularly the workings of the blockchain economy. Players do not earn traditional fiat money directly, they can earn tokens, which can be converted into major cryptocurrencies and then converted further into fiat or used directly.

A huge number of Vietnamese blockchain startups want to expand to the global market, Photo: Shutterstock

However, due to a lack of a legal system for cryptocurrency payments, Vietnam is missing out on the chance to unleash the full potential of its blockchain gaming sector. The country is also losing the opportunity to increase the state budget and protect investors.

In July, the governor of the State Bank of Vietnam (SBV) issued Circular No. 09/2022/TT-NHNN providing guidance on the foreign exchange management applicable to the business of prize-winning electronic games for foreigners. The circular took effect on September 1.

According to Article 4 under the circular, players may exchange tokens for a foreign currency or VND if they have not used them up or if they win prizes in tokens at enterprises and may use foreign currency amounts exchanged from tokens for conducting the transactions.

However, these regulations are only applied to prize-winning electronic games. Meanwhile, the regulatory bodies have yet to issue any legislation governing the exchange of tokens in the NFT and GameFi field.

Trinh Ngoc Duc, CEO of FOTA, told VIR, “There is currently no official exchange platform in Vietnam that allows Vietnamese citizens to trade cryptocurrencies. Remitano is one of the so-called Vietnamese exchanges that work with local banks to help consumers trade cryptocurrencies, although its head office is based overseas.”

He added that the majority of Vietnamese citizens can only conduct transactions via international exchanges and nations where cryptocurrencies are legal. As a result, the nations can attract exceptionally large amounts of foreign exchange from all around the world.

If Vietnam can formulate a legal framework for this field, the country can lure a huge amount of money. This prospect is underpinned by Vietnam’s position as one of the world’s top 10 nations in the crypto and blockchain field in terms of users and transaction volumes.

In the past few years, Vietnam has emerged as one of the leading countries in the NFT and GameFi scene. A survey by Australian data research company Finder from March to May revealed that Vietnam ranks fifth in the world in terms of NFT game players, backed by the growing popularity of play-to-earn entertainment platforms.

About 23 per cent of surveyed respondents in Vietnam say they play NFT games, and 9.6 per cent indicate they continue to do so in the future.

Meanwhile, scores of Vietnamese startups are expanding their reach into the global blockchain market. The startups have received funding from individual investors and funds around the world.

The lack of a legal framework means Vietnam will lose out on foreign capital. However, Vietnam's government does not seem unaware of these opportunities. In March, Deputy Minister Le Minh Khai instructed relevant ministries to develop a regulatory framework for digital assets and cryptocurrencies.

In addition, Vietnam is considering a new circular to regulate NFTs and GameFi. If approved, the fresh circular will pave the way for related projects to enter the Vietnamese market. This development will also encourage Vietnamese startups to build their operations in Vietnam.

Duc of FOTA said that there are many experts and industry leaders who have gained a deep understanding of the legal framework in other countries. “Vietnamese regulators should consult with these experts to discuss and find solutions that match the Vietnamese market. This will facilitate Vietnam to develop the legal framework in compliance with national laws to draw in the cash flow and increase the country’s position in the global market,” he added.

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