On June 14, 2025, the National Assembly of Vietnam approved the "Digital Technology Industry Law," which will take effect on January 1, 2026.
Vietnam's cryptocurrency regulation is part of its broader strategy to meet FATF standards, as the country was placed on the gray list in 2023 due to deficiencies in anti-money laundering/anti-terrorist financing (AML/CFT).
The law clearly distinguishes between crypto assets (such as Bitcoin and Ethereum) and virtual assets (non-financial digital projects), while excluding central bank digital currencies and securities.
The law imposes strict requirements for identity verification, transaction monitoring, and reporting obligations to effectively detect and prevent digital asset fraud, filling enforcement gaps.
The passage of the "Digital Technology Industry Law" on June 14, 2025, marks a significant step for Vietnam in digital asset management. The law will come into effect on January 1, 2026, introducing a clear regulatory framework for Vietnam's burgeoning cryptocurrency industry. This initiative represents Vietnam's broader efforts to enhance its financial reputation and escape the FATF gray list.
Through this legislation, Vietnam has established a comprehensive legal framework for digital assets. This framework includes detailed classifications of digital assets, stringent licensing requirements, and robust compliance mechanisms aligned with international standards. By implementing standardized management in the cryptocurrency industry, Vietnam aims to effectively address FATF concerns, boost investor confidence, and position itself as a digital economy hub in Southeast Asia.
This article delves into how cryptocurrency reforms support Vietnam's FATF recovery strategy. It analyzes Vietnam's cryptocurrency legal system in detail and explains how it specifically addresses various concerns raised by the FATF.
The FATF, established by the G7 in 1989, is an international organization that sets global standards to combat money laundering, terrorist financing, and other threats to the financial system. The FATF formulates guiding policies and monitors their implementation in member countries. The G7 is an intergovernmental organization composed of seven leading developed economies: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
The FATF provides expert advice to guide national legislation and assesses compliance through a peer review mechanism. Countries that do not meet FATF standards may be placed on the "gray list" or "black list," severely damaging their global financial reputation and investment environment.
Did you know? By fully complying with FATF rules, Vietnam hopes to attract global venture capital and cryptocurrency exchanges, turning regulatory clarity into a powerful tool for economic development.
In June 2023, Vietnam was placed on the FATF gray list, officially termed "jurisdictions under increased monitoring," after the country agreed to address significant deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CFT) measures.
The FATF pointed out several issues, including insufficient regulation of financial institutions, weak execution of customer due diligence (CDD), and inadequate oversight of virtual asset service providers. The FATF also expressed concerns about Vietnam's efforts to combat illegal financing related to the proliferation of weapons.
To be removed from the gray list, Vietnam must fully implement the FATF action plan. This includes strengthening the AML legal framework, enhancing regulatory effectiveness, reinforcing customer due diligence, and ensuring effective measures against financial crime.
The FATF monitors progress through regular updates and on-site visits. Once Vietnam demonstrates its compliance, member countries will vote in a plenary session to decide whether to remove it from the list, marking the restoration of international trust in the integrity of the country's financial system.
Vietnam has become the first country globally to pass an independent law specifically targeting the digital technology industry. This law was approved in June 2025 and will take effect in January 2026.
Here are the key points of Vietnam's "Digital Technology Industry Law":
Long-term development goal: Through the "Made in Vietnam" initiative, the plan is to nurture 150,000 digital technology enterprises by 2035.
Clear classification system: The law clearly distinguishes between crypto assets (such as Bitcoin and Ethereum) and virtual assets (non-financial digital projects), achieving risk-based precise regulation in line with FATF guidelines.
Comprehensive incentive policies: Tax incentives, financial subsidies, and import duty exemptions are provided for startups, small and medium-sized enterprises, and foreign technology investors.
Talent support program: Vietnamese digital experts enjoy a five-year tax exemption; foreign experts receive five-year visas without needing to apply for work permits.
Artificial intelligence and digital asset regulatory framework: A risk-based regulatory system for artificial intelligence and legal norms for cryptocurrencies and virtual assets are introduced.
Regulatory sandbox mechanism: Allows testing of blockchain, DeFi, and virtual asset technologies in a controlled environment to promote industry innovation.
The law categorizes digital assets into two main types:
Virtual assets: Refers to non-financial digital projects used for exchange or investment. This excludes securities, central bank digital currencies (CBDC), legal tender, and traditional financial instruments.
Crypto assets: Refers to digital assets managed through cryptography or blockchain technology for issuance, transfer, and storage. Similar to virtual assets, they do not include securities or CBDCs.
This classification of digital assets establishes a structured legal framework that allows these assets to be used legally under regulation while clearly distinguishing them from mainstream financial products. The law mandates the government to be responsible for licensing, supervision, and operational guidance for each category, indicating that Vietnam is moving towards increased transparency and compliance.
The law explicitly excludes securities, CBDCs, and traditional financial instruments from the aforementioned categories.
Significant changes for crypto startups include legal recognition, the establishment of a regulatory framework, and tax incentives. The law also includes provisions for establishing pilot sandbox mechanisms for virtual asset products and services. Blockchain startups can benefit from tax reductions, financial subsidies, and talent training program support.
Did you know? Vietnam's cryptocurrency law allows regulatory agencies to engage in international cooperation in the field of digital asset fraud, enhancing cross-border investigation capabilities and effectively curbing global cryptocurrency crime.
As an initiative that is not only a significant domestic milestone, Vietnam's "Digital Technology Industry Law" represents a key step in aligning the country's digital asset sector with FATF anti-money laundering and counter-terrorist financing standards.
Key highlights include:
Formal legalization of cryptocurrency: The 2025 law explicitly recognizes ownership and usage rights of cryptocurrencies, ending the legal ambiguity and aligning with FATF's push for clear regulation of digital assets.
Clear classification system: The law distinctly separates crypto assets (such as Bitcoin and Ethereum) from virtual assets (non-financial digital projects), achieving more precise risk-based regulation in line with FATF guidelines.
Integration of AML and CFT: Cryptocurrency exchanges and wallet service providers will be included in the national regulatory framework, helping Vietnam address FATF concerns regarding insufficient customer due diligence and illegal fund flows.
Separate regulation for stablecoins: Fiat-backed stablecoins will be regulated separately under financial laws, ensuring consistent oversight mechanisms and reducing systemic risks, in line with FATF's risk-based approach.
Providing regulatory clarity for businesses: A clear rule system attracts crypto startups and promotes industry standardization, making transaction monitoring, KYC execution, and reducing capital outflow more efficient.
These reforms directly support Vietnam's goal of exiting the FATF gray list, establishing a transparent and controlled cryptocurrency environment that meets global standards.
The legislation also empowers the government to formulate licensing rules, asset classifications, and supervisory mechanisms, ensuring that crypto service providers and financial institutions operate within a regulated environment.
Through these measures, Vietnam clearly indicates its commitment to meeting FATF standards and rebuilding international trust in its financial ecosystem.
The law provides Vietnamese regulatory authorities with a clear legal framework for investigating, prosecuting, and curbing digital asset fraud. Previously, the lack of legal tools severely hindered law enforcement efforts. The new law introduces compliance obligations, including identity verification, transaction monitoring, and reporting responsibilities.
Two recent fraud cases highlight the urgency of these reforms:
In February 2025, authorities arrested four suspects behind BitMiner, a fraudulent crypto mining scheme that defrauded over 200 victims of more than 4 billion VND (approximately $157,300).
In December 2024, police in Hanoi successfully dismantled a scam network involving Million Smiles, which promoted a cryptocurrency called QFS through fraudulent advertising, resulting in losses of about $1.17 million.
The law passed by the National Assembly of Vietnam includes AML and CFT measures, requiring crypto service providers to implement compliance procedures such as identity verification, transaction monitoring, and reporting obligations.
The law's provisions promote deep cooperation with international regulatory bodies. By aligning its cryptocurrency regulations with global standards, Vietnam has strengthened collaboration with foreign regulators in cross-border investigations.
Experts point out that this law is particularly important for addressing transnational crypto crime, as assets and suspects often span multiple jurisdictions. By filling legal gaps and enhancing regulatory coordination, Vietnam not only improves its national law enforcement capabilities but also enhances its reputation in the global financial community.
Did you know? Being placed on the FATF gray list not only damages a country's reputation; it also leads foreign banks to be cautious about cooperating with that country's financial institutions, thereby limiting capital flows and investment opportunities.
Vietnam's new cryptocurrency law is a crucial part of its strategy to become a digital technology hub in Southeast Asia. By formally recognizing crypto assets, the Vietnamese government opens the door to innovation while attracting the attention of global startups and investors.
The law provides a range of substantial incentives for technology companies, including:
Tax reductions for blockchain, artificial intelligence, and chip design companies.
Subsidies for opportunities to enter digital parks and innovation zones.
Special funding and infrastructure support for semiconductor and cloud technology research and development.
To build a complete innovation ecosystem, the Vietnamese government is simultaneously investing in digital education, ensuring a sufficient reserve of technical talent for the future through vocational training programs, school-enterprise cooperation, and technology internship projects.
These multifaceted initiatives aim to position Vietnam as a regional leader in digital innovation.
Vietnam's cryptocurrency regulations are at the core of its FATF compliance strategy. By clearly defining the terms for virtual assets and crypto assets and strictly enforcing licensing systems, AML/KYC, cybersecurity, and transaction monitoring regulations, Vietnam has aligned with FATF Recommendation 15, which was one of the main issues when it was placed on the gray list.
At the same time, the State Bank of Vietnam has significantly strengthened AML regulations, updated risk assessment mechanisms, standardized reporting processes, and enhanced customer due diligence (CDD) through the revised Circular No. 09. Experts indicate that if these reforms can be fully implemented by January 2026, Vietnam is likely to be removed from the FATF gray list.
A clear regulatory environment significantly boosts investor confidence. The operation of legalized exchanges and strict compliance standards provide assurance for international crypto companies, venture capital firms, and technology companies. Additionally, the seamless integration of the crypto sector with the traditional banking system improves access to capital markets and institutional financing.
In the long run, Vietnam's cryptocurrency regulatory system not only addresses FATF concerns but also enhances its international image as a transparent and innovation-friendly economy.
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Original article: How Vietnam is Using Crypto to Fix Its FATF Reputation
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