Surge in Cryptocurrency Investment Indicates Multi-Billion-Dollar Opportunity
Vietnam has witnessed a significant influx of cryptocurrency investments, estimated in the hundreds of billions of dollars over the past year. However, this booming market is largely unregulated, which could result in tax losses and risks such as money laundering.
Growing Investment and Institutional Interest
Lina Nguyen, Business Development Director at Exness Investment Bank, highlighted that the dormant phase of cryptocurrencies has ended, with positive signals becoming more evident. She noted that more institutional investors are entering the market, signaling a continuing rise in digital asset investment, although retail investors remain cautious.
In the first few months of this year alone, over $1.2 trillion has been invested in digital asset exchange-traded funds (ETFs). According to US blockchain analysis firm Chainalysis, the positive trend in the cryptocurrency market observed in 2023 is expected to continue into 2024. This is supported by the US approval of spot Bitcoin ETFs and the growing participation of institutional investors.
Vietnam’s Leading Role in Cryptocurrency Adoption
Vietnam ranks third globally in the number of cryptocurrency holders. Data from Crypto Crunch App indicates that 26 million people in the country own cryptocurrencies, which is five times the number of local stock trading accounts. Chainalysis reports that up to $120 billion in cryptocurrencies entered Vietnam within a year leading to June 2023. Vietnamese investors netted $1.18 billion in profits last year, placing the nation among the top five Asian markets with the highest returns from cryptocurrency investments, alongside China, Indonesia, India, and the Republic of Korea.
Need for Regulatory Framework
As interest in owning and investing in digital assets grows, there is an urgent need for consumer protection regulations and market transparency. This includes measures to prevent fraud and combat cyber threats. Implementing strict regulations to protect consumers could help build investor confidence and encourage broader participation in the crypto asset market.
Without a robust legal framework to monitor the flow of cryptocurrency capital, Vietnam risks losing significant tax revenues and facing increased risks of money laundering. Addressing these issues through comprehensive regulations will be crucial for sustaining the growth and safety of the cryptocurrency market in Vietnam.
