Legal Regulation on Blockchain Technology in Vietnam

Blockchain technology (blockchain) is increasingly becoming an important part of the digital economy, and Vietnam is not left out in the development of a legal framework for this technology. On October 22, 2024, the Government of Vietnam issued Decision No. 1236/QĐ-TTg on the National Strategy on the application and development of blockchain technology to 2025, with orientation to 2030. In the following article, Viet An Law will provide you with legal regulation on blockchain technology.

Definition and Characteristics of Blockchain

Definition of Blockchain

Blockchain (blockchain technology) is simply understood as a technology that encodes all data into different blocks and connects them to form a long chain. In the case of new information, it will be saved in a new block and linked to the old block to form a new chain. As a result, old information in Blockchain technology is not lost.

Characteristics of Blockchain

• Transparency and immutability: Every transaction on Blockchain is recorded transparently and cannot be changed once confirmed by the system, thereby enhancing safety and reliability.
• No need for a central management organization: Blockchain operates without the need for a central management organization. Each node in the network holds a copy of the ledger, ensuring the integrity and transparency of the data.
• Security and hack-proof: By using advanced encryption and complex transaction verification mechanisms, Blockchain ensures that data cannot be hacked or altered without authorization.
• Smart Contracts: Blockchain allows the creation and execution of smart contracts, automating processes and transactions without human intervention.

Legal Framework Governing Current Blockchain Technology

Currently, Vietnam has not yet defined an exact definition or specific legal corridor to promote the development and application of Blockchain technology. However, in many decisions of the Vietnamese government, Blockchain is becoming one of the technologies prioritized for research, development, and application. The legal regulation on blockchain technology is typically stated in:

• Information Technology Law 2006, Electronic Transactions Law 2023, Intellectual Property Law 2005 amended 2022, Cybersecurity Law 2018, Competition Law 2018;
• Decision No. 100/QĐ-TTg: “Approval of the proposal to deploy, apply and manage the traceability system using new technologies to enhance the efficiency of traceability activities” in which: Implement research, application science and technology projects to develop solutions and technologies (Blockchain, IoT, AI, Big Data, and new technologies in line with global development trends) applied in traceability.
• According to Decision No. 2117/QĐ-TTg in 2020 of the Prime Minister on the promulgation of the list of technologies prioritized for research, development, and application to proactively participate in the fourth industrial revolution.
• According to Decision No. 749/QĐ-TTg of the Prime Minister approving the “National Digital Transformation Program to 2025, with orientation to 2030”: Blockchain is one of the core technologies selected for priority research that Vietnam can leapfrog and create strong breakthroughs.
• According to Decision No. 942/QĐ-TTg of the Prime Minister approving the “Strategy for the Development of E-Government towards Digital Government for the period 2021 – 2025, with orientation to 2030” on the solution “Research, build, and pilot the use of virtual money based on blockchain technology.”
• Decision No. 1236/QĐ-TTg of the Prime Minister Issuing the Strategy for the Application and Development of Blockchain Technology to 2025, with orientation to 2030.
• In addition, the Digital Technology Industry Law is being drafted and expected to be completed for submission to the National Assembly in May 2025. The new regulations promise to create a comprehensive legal framework to create a favorable environment for the development of the information technology industry in general and Blockchain in particular.

Types of Blockchain

Based on their purpose and level of control, Blockchain is divided into three main types:

• Public Blockchain: This is an open blockchain that allows anyone to participate, verify, and conduct transactions. Typical examples of this type of Blockchain are Bitcoin and Ethereum. In Public Blockchain, all transactions are public and transparent, but no one can control or alter the data once it has been recorded in the Blockchain.
• Private Blockchain: A blockchain that only allows specific users to participate. This type of Blockchain is often used in organizations or enterprises to ensure that access rights and transaction execution are tightly controlled. Private Blockchain enhances security and is more efficiently managed compared to Public Blockchain.
• Permissioned Blockchain: A form of Private Blockchain, but users are provided with certain privileges depending on the third-party provider. Permissioned Blockchain is often used in enterprise environments to ensure flexibility and high control over access rights and transaction execution.

Applications of Blockchain in Vietnam

Blockchain technology, with its ability to create a distributed, immutable, and transparent digital ledger, is revolutionizing many fields. Here are some prominent applications of blockchain:

• Cryptocurrency: This is the most common application of Blockchain, with Bitcoin being the most famous example.
• Smart Contracts: Blockchain allows the creation and execution of automatic, transparent, and immutable contracts. Therefore, this technology is widely applied in major financial systems, real estate organizations, and many other fields.
• Supply Chain Management: Blockchain helps accurately and transparently track and manage supply chains, from product origin to distribution processes. Companies like Walmart, Pfizer, AIG, Siemens, and Unilever are also experimenting with Blockchain in their global supply chain management.
• Data Security and Privacy Protection: Blockchain is also used for storing and protecting personal data to prevent fraud and enhance information security.
• Healthcare: Blockchain can even be used to store and manage medical records, making information sharing between stakeholders safer and more efficient.

Legal Regulation on Blockchain Technology

Currently, the legal framework for blockchain in Vietnam is still inconsistent. Although there have been some guiding documents such as Decision No. 1236/QĐ-TTg of the Prime Minister on the strategy for the application and development of blockchain until 2030, specific regulations on safety standards, data security, or transaction processes on blockchain platforms have not yet been detailed.

Development Goals:

• Establishing a platform for blockchain technology development, including the formation of blockchain infrastructure that ensures compliance with cybersecurity and personal data protection regulations.
• Promoting research and application development of blockchain technology at innovation centers.
• Building 20 reputable blockchain brands in the region and maintaining at least 3 blockchain testing centers in major cities.

Specific Actions:

• Completing the legal environment for blockchain.
• Developing infrastructure and forming a blockchain industry ecosystem.
• Developing human resources for the blockchain sector.
• Promoting research, innovation, and international cooperation in this field.

Orientation to 2030:

• Vietnam will become a leading country in the region in research, deployment, and application of blockchain technology.
• Strengthening and expanding the national blockchain infrastructure, issuing standards on blockchain application and development.
• Building a legal framework and related regulations on blockchain.

This strategy not only sets development goals but also emphasizes the importance of building a clear legal framework for blockchain technology. This includes:

• Issuing regulations and standards on blockchain platforms, products, applications, and services.
• Developing a legal sandbox framework for blockchain applications in potential fields such as finance and transportation.
• Ensuring information security and privacy in blockchain applications, complying with regulations on personal data protection.

The above content outlines the legal regulations on blockchain provided by Viet An Law. If you have any legal questions, please contact us for timely support.