Pioneering Vietnam Crypto Regulation: How a Nation Aims to Conquer the FATF Gray List

The world of cryptocurrency is often seen as a wild frontier, but what happens when a nation decides to tame it, not just for control, but for its global standing? Vietnam, a nation known for its rapid economic growth, is embarking on a bold journey. It’s leveraging Vietnam crypto regulation not only to combat illicit activities but also to rebuild its international financial reputation. This strategic move aims to lift the country from the Financial Action Task Force (FATF) gray list, signaling a new era of transparency and trust in its digital economy.

Understanding Vietnam’s Bold Move in Crypto Regulation

On June 14, 2025, Vietnam’s National Assembly approved a landmark piece of legislation: the Law on Digital Technology Industry. Set to take effect on January 1, 2026, this law marks a pivotal moment for Vietnam’s approach to digital assets. This isn’t just about controlling a burgeoning industry; it’s a calculated part of Vietnam’s broader effort to meet international financial standards and address significant deficiencies that led to its recent gray-listing by the Financial Action Task Force (FATF).

Key aspects of this foundational Vietnam crypto regulation include:

• Legal Recognition: The law formally recognizes crypto assets like Bitcoin and Ether, ending previous legal ambiguities.
• Clear Classification: It distinguishes between ‘crypto assets’ (digital assets using encryption/blockchain for issuance, transfer, storage) and ‘virtual assets’ (non-financial digital items used for exchange or investment). Notably, it excludes CBDCs, securities, and traditional financial instruments from these categories.
• Regulatory Framework: It establishes a comprehensive legal framework for digital assets, covering licensing, oversight, and compliance mechanisms.
• FATF Alignment: The entire initiative is deeply rooted in the goal of aligning Vietnam’s digital asset sector with FATF standards, particularly regarding Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT).

By providing regulatory clarity, Vietnam aims to attract global investors and position itself as a progressive digital economy hub in Southeast Asia, turning a regulatory challenge into an economic opportunity.

The Shadow of the FATF Gray List and Vietnam’s Path to Redemption

To fully grasp the significance of Vietnam’s new crypto law, one must understand the role of the FATF and the implications of its ‘gray list’. Founded in 1989 by the G7 nations, the Financial Action Task Force is a global watchdog that sets international standards to prevent money laundering, terrorist financing, and other threats to the financial system. It provides recommendations that shape national laws and assesses compliance through rigorous peer reviews.

In June 2023, Vietnam found itself on the FATF gray list, officially known as ‘jurisdictions under increased monitoring’. This designation came after Vietnam agreed to address critical deficiencies in its Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures. Specific concerns raised by the FATF included:

• Inadequate supervision of financial institutions.
• Weak Customer Due Diligence (CDD) practices.
• Insufficient regulation of virtual asset service providers (VASPs).
• Concerns about efforts to combat illicit financing linked to weapons proliferation.

Being on the FATF gray list carries significant consequences. It can damage a country’s international financial reputation, deter foreign investment, increase the cost of international transactions, and make foreign banks hesitant to work with domestic institutions. To be removed, Vietnam must diligently implement a detailed FATF action plan, which involves strengthening AML laws, improving regulatory oversight, enhancing CDD, and ensuring effective prosecution of financial crimes. The FATF monitors this progress through regular updates and on-site visits, with removal decided by a plenary vote once compliance is demonstrated.

Decoding Vietnam’s Law on Digital Technology Industry: A New Crypto Legal Framework

Vietnam has made a pioneering move by becoming one of the first countries globally to pass a standalone law specifically dedicated to the digital technology industry. This comprehensive legislation, passed in June 2025 and effective January 2026, lays down a robust crypto legal framework that aims to foster innovation while ensuring compliance. Here are some key highlights:

• Ambitious Growth Targets: The law supports the ‘Make in Vietnam’ initiative, aiming to establish 150,000 digital tech firms by 2035, underscoring a commitment to digital transformation.
• Defined Digital Asset Categories: A crucial aspect is the clear distinction between ‘Virtual Assets’ and ‘Crypto Assets’. This nuanced approach allows for more precise, risk-based regulation, aligning with FATF guidance. Virtual assets are non-financial digital items for exchange or investment, while crypto assets are digital assets using encryption/blockchain for issuance, transfer, and storage. Both exclude securities, CBDCs, and traditional financial instruments.
• Strong Incentives: The law offers significant benefits for startups, SMEs, and foreign tech investors, including tax breaks, grants, and import duty exemptions, creating an attractive environment for digital innovation.
• Workforce Support: To cultivate a skilled workforce, Vietnamese digital experts receive five years of tax exemption, and foreign experts benefit from five-year visas with no work permit requirement.
• AI and Digital Asset Regulation: It introduces a risk-based AI framework and clear legal rules for crypto and virtual assets, providing much-needed clarity.
• Regulatory Sandbox: A key feature is the provision for a regulatory sandbox, allowing controlled testing of blockchain, DeFi, and virtual asset technologies. This fosters innovation while mitigating risks.

This structured legal framework not only facilitates the regulated use of digital assets but also empowers the government with clear guidelines for licensing, oversight, and operational standards. It’s a strategic move towards transparency and compliance, offering legal recognition, a clear regulatory path, and tax incentives for crypto startups.

Fortifying Defenses: Combating Digital Asset Fraud with New Laws

The absence of clear legal tools previously hampered enforcement efforts against digital asset crimes in Vietnam. The new Law on the Digital Technology Industry directly addresses this by providing Vietnamese authorities with a robust legal framework to investigate, prosecute, and deter digital asset fraud. This includes critical compliance obligations for crypto service providers:

• Identity Checks: Mandatory Know Your Customer (KYC) procedures for users.
• Transaction Monitoring: Systems to detect suspicious activities and large transactions.
• Reporting Obligations: Requirements to report suspicious transactions to relevant authorities.

Recent fraud cases underscore the urgency of these reforms. In February 2025, authorities arrested individuals behind BitMiner, a fake crypto mining scheme that defrauded 200 victims of over 4 billion Vietnamese dong (approximately $157,300). Similarly, in December 2024, Hanoi police disrupted the Million Smiles scam, which used deceptive ads to promote a cryptocurrency called QFS, resulting in losses of about $1.17 million. These cases highlight the real-world impact of unregulated digital asset spaces.

Crucially, the law also facilitates greater cooperation with international regulators. By aligning its crypto regulations with global standards, Vietnam improves its capacity for cross-border investigations. This is vital for addressing transnational crypto crimes, where assets and suspects often cross jurisdictions. By closing legal gaps and enhancing regulatory coordination, Vietnam strengthens its national enforcement efforts and bolsters its reputation in the global financial community as a reliable partner in combating financial crime.

Boosting Trust and Investment: The Power of AML/CFT Compliance

More than just a domestic achievement, Vietnam’s Law on the Digital Technology Industry represents a critical step toward aligning its digital asset sector with FATF standards on Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT). This legislative effort directly addresses FATF Recommendation 15, which was a key issue cited during Vietnam’s gray listing. By formalizing crypto ownership and use, Vietnam ends legal ambiguity, aligning with FATF’s call for clear national regulation of digital assets.

Key aspects that bolster AML/CFT compliance include:

• State Supervision: Crypto exchanges and wallet providers will now fall under state supervision, directly addressing FATF concerns about weak customer due diligence and illicit finance in the virtual asset space.
• Risk-Based Regulation: The defined categories of crypto and virtual assets enable a more precise, risk-based approach to regulation, a core tenet of FATF guidance.
• Stablecoin Oversight: Fiat-backed stablecoins are regulated separately under existing financial laws, ensuring consistent oversight and reducing systemic risk in line with FATF’s risk-based approach.
• Regulatory Clarity: Clear rules attract legitimate crypto startups and help formalize the sector. This makes it easier for authorities to monitor transactions, enforce KYC (Know Your Customer) procedures, and reduce capital flight, all vital for AML/CFT efforts.

In parallel with this new law, the State Bank of Vietnam has tightened existing AML rules, updated risk assessments, standardized reporting practices, and strengthened Customer Due Diligence (CDD) under revised Circular 09. If fully implemented by January 2026, these reforms could pave the way for Vietnam’s removal from the FATF gray list.

This clear regulatory environment significantly enhances investor confidence. Legalized exchange operations and strong compliance standards reassure international crypto businesses, venture capitalists, and tech firms. Moreover, seamless integration between crypto and traditional banking systems improves access to capital markets and institutional finance, positioning Vietnam as a secure and attractive destination for digital economy investments.

Opening the Door to Digital Innovation

Vietnam’s new crypto law is not merely a compliance exercise; it is an integral part of its broader ambition to become a leading digital technology hub in Southeast Asia. By formally recognizing and regulating crypto assets, the government actively welcomes innovation and aims to attract global startups and investors to its shores. The law offers significant incentives for tech companies, including:

• Tax reductions for blockchain, AI, and chip design firms.
• Subsidized access to digital campuses and innovation parks.
• Grants and infrastructure support for research and development in semiconductors and cloud technology.

To further support this burgeoning ecosystem, the government is making substantial investments in digital education. This includes vocational programs, robust university-industry collaborations, and tech apprenticeships, all designed to ensure a steady supply of skilled workforce for the future digital economy. These combined efforts aim to establish Vietnam as a regional leader in digital innovation, leveraging its new regulatory clarity as a competitive advantage.

Vietnam’s Global Image and Future FATF Review

Vietnam’s comprehensive cryptocurrency law stands at the core of its FATF compliance strategy. By clearly defining virtual and crypto assets and enforcing stringent rules on licensing, AML/KYC, cybersecurity, and transaction oversight, the country has directly addressed deficiencies highlighted during its gray listing. This aligns Vietnam with international standards, particularly FATF Recommendation 15, which specifically deals with virtual assets and virtual asset service providers.

The synergy between the new Digital Technology Law and the strengthened AML rules from the State Bank of Vietnam under revised Circular 09 demonstrates a unified national effort. This coordinated approach, if fully implemented by January 2026, could significantly bolster Vietnam’s case for removal from the FATF gray list. A successful exit would signal renewed trust in Vietnam’s financial integrity and reduce the perceived risks for international financial institutions and investors.

Beyond compliance, a clear regulatory environment profoundly enhances investor confidence. The legalization of exchange operations and the establishment of robust compliance standards provide much-needed reassurance to international crypto businesses, venture capitalists, and technology firms looking to expand into Southeast Asia. This regulatory clarity fosters a more predictable and secure investment climate. Moreover, improved integration between the regulated crypto sector and traditional banking systems can enhance access to capital markets and institutional finance, further accelerating economic growth.

Ultimately, Vietnam’s proactive crypto regulation serves a dual purpose: it effectively addresses critical FATF concerns and simultaneously elevates its global image as a transparent, secure, and innovation-friendly economy ready for the digital age. This strategic foresight positions Vietnam not just as a compliant nation, but as a potential leader in the global digital economy.