Banks Confused With Digital Assets, Cryptocurrencies

Businesses are eager, banks are hesitant

Mr. Nguyen Kim Hung, Chairman of the Board of Directors of Kim Nam Group, said that many businesses own software products with great commercial value, but they are not valued by banks and are not considered as collateral. Many businesses want to issue tokens to raise global capital, but cannot do so due to legal obstacles. Meanwhile, in the world, the digital technology race is accelerating.

“We hope that the relevant authorities will study and consider issuing regulations on identifying digital assets and methods for valuing digital assets for businesses so that they can access capital sources from commercial banks and invest in the short, medium and long term. If we can resolve this, the flow of money from banks to the small and medium-sized enterprise community will be better,” Mr. Hung suggested.

According to experts, the Draft Law on Digital Technology Industry has initially established the concept of digital assets and ownership of these assets. “This is an important step that paves the way for the establishment and secured transactions of digital assets in the future,” emphasized Dr. Le Thi Giang, Hanoi Law University.

Experts say that Vietnam should consider issuing a separate law or decree on digital assets, clearly defining the responsibilities of related parties such as issuers, exchanges, investors and requiring operating licenses. On the other hand, it should strengthen supervision against money laundering and terrorist financing, requiring exchanges to register with the regulatory agency.

Digital assets have become an inevitable trend in the global economy , bringing many opportunities, but also many challenges in terms of law and risk management. Collateralizing loans with digital assets, especially through DeFi and NFT platforms, has demonstrated great potential in revolutionizing the traditional financial industry. However, for sustainable development, countries need to build a clear legal framework, balancing between promoting innovation and protecting users.

- Lawyer Vu Van Tinh, Director of Salus Law Firm LLC

In the immediate future, it is possible to issue a sandbox regulation allowing some banks or financial institutions to pilot mortgage loans using digital assets for 3-5 years; evaluate the pilot results to adjust the legal framework, ensuring a balance between innovation and risk control; prioritize highly liquid digital assets during the testing phase; consider establishing a specialized agency to monitor the digital asset market, ensuring compliance with regulations on capital, risk management and anti-money laundering, etc.

Lawyer Truong Thanh Duc, Director of ANVI Law Firm, said that according to regulations, assets can be mortgaged if they meet two conditions: ownership and not being prohibited from trading. Cryptocurrencies that meet these two conditions can, in theory, be used as collateral. However, in reality, no bank dares to accept cryptocurrencies for secured transactions, partly because the State Bank has issued a directive, partly because the risks are too great.

"Accepting collateral is to prevent risks, but the collateral itself is too risky, so it is understandable that banks are afraid," Mr. Duc commented.

Can be piloted, but only suitable for investment funds

According to Mr. Giacomo Merello, Chairman of the Antigua and Barbuda Digital Asset Business Promotion Council, Special Economic Envoy of the Prime Minister of Antigua and Barbuda in Singapore, in the world, some countries have allowed the use of digital assets in general, and cryptocurrencies in particular, as collateral at banks. Specifically, Singapore recognizes stable coins as a type of asset. Switzerland allows banks to provide loans guaranteed by cryptocurrencies, but this service is mainly provided to investment funds and large enterprises, not to small individuals.

Mr. Giacomo Merello admitted that in many countries, accepting cryptocurrencies as collateral is only implemented in digital banks (mostly small and medium-sized banks) and only applies to large customers. Meanwhile, large and long-standing commercial banks are still very conservative, hardly accepting cryptocurrencies as collateral. The ability of Vietnamese banks to accept digital assets as collateral, or even participate in this field, is very limited.

Recently, responding to shareholders about participating in establishing a digital asset trading floor (the draft is being developed by the Ministry of Finance), BIDV leaders said that, as a domestic commercial bank, BIDV will actively participate with ministries and branches to implement. However, establishing a BIDV digital asset trading floor will be "reserved" for the private enterprise sector.

“BIDV has no plans to establish a company to deploy this platform, as this requires a large amount of capital, not to mention technology and other factors. However, BIDV will participate in the market as a bank serving payment and related operations,” BIDV leaders affirmed.

Banks’ caution with digital assets, especially cryptocurrencies, is understandable. However, according to experts, in the context of strong growth in digital assets, a legal framework is still needed on this issue. Of course, whether to accept or not will depend on each bank’s risk appetite.

According to lawyer Vu Van Tinh, Director of Salus Law Firm LLC, it is necessary to add a definition of digital assets to the Civil Code. At the same time, it is necessary to issue a separate law or decree on digital assets, and issue a sandbox mechanism allowing some banks or financial institutions to pilot mortgage loans using digital assets for 3-5 years.

Source: https://baodautu.vn/ngan-hang-lung-tung-voi-tai-san-so-tien-ma-hoa-d278833.html