How Vietnam is using crypto to fix its FATF reputation

Key takeaways

On June 14, 2025, Vietnam’s National Assembly approved the Law on Digital Technology Industry, effective Jan. 1, 2026.
Vietnam’s crypto regulation is part of a broader effort to meet FATF standards after being gray-listed in 2023 due to AML/CFT deficiencies.
The law distinguishes between crypto assets (e.g., Bitcoin, Ether) and virtual assets (non-financial digital items), excluding CBDCs and securities.
The law mandates identity checks, transaction monitoring and reporting obligations to detect and prevent digital asset fraud, addressing enforcement gaps.

On June 14, 2025, Vietnam’s National Assembly passed the Law on Digital Technology Industry, signaling a significant shift in how the country manages digital assets. Effective Jan. 1, 2026, this law introduces clear regulations for Vietnam’s fast-growing cryptocurrency sector. It represents a broader attempt by Vietnam to improve its financial reputation and exit the Financial Action Task Force (FATF) gray list.

With this law, Vietnam has implemented a comprehensive legal framework for digital assets. This includes classifying digital assets, licensing requirements and robust compliance mechanisms aligned with international standards. By regulating its crypto sector, Vietnam aims to address FATF concerns, boost investor confidence and position itself as a digital economy hub in Southeast Asia.

Vietnamese lawmakers in action regarding the Law on Digital Technology Industry

This article explores how crypto reform supports Vietnam’s FATF comeback strategy. It digs into Vietnamese crypto law and explains how it addresses the FATF’s concerns.

What is the FATF

Founded in 1989 by the G7, or the Group of Seven, the FATF is a global organization that establishes standards to prevent money laundering, terrorist financing and other threats to the financial system. The FATF creates policies and oversees their adoption in member countries. The G7 is an intergovernmental organization comprising seven leading advanced economies: Canada, France, Germany, Italy, Japan, the UK and the US.

The FATF provides recommendations to shape national laws and assesses compliance through peer reviews. Countries that do not meet FATF standards may be placed on a “gray list” or “blacklist,” which can harm their global financial reputation and investment environment.

Did you know? By complying with FATF rules, Vietnam hopes to attract global VCs and crypto exchanges, turning regulatory clarity into an economic development tool.

Vietnam’s FATF gray list status and steps toward financial reform

In June 2023, Vietnam was placed on the FATF gray list, officially termed “jurisdictions under increased monitoring,” after agreeing to address significant deficiencies in its Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures.

The FATF cited issues such as inadequate supervision of financial institutions, weak Customer Due Diligence (CDD) and insufficient regulation of virtual asset service providers. It also raised concerns about Vietnam’s efforts to combat illicit financing tied to weapons proliferation.

To be removed from the gray list, Vietnam must fully implement an FATF action plan. This includes strengthening AML laws, improving regulatory oversight, enhancing CDD and ensuring effective prosecution of financial crimes.

The FATF monitors progress through updates and on-site visits. Once compliance is demonstrated, member states vote in a plenary session to decide on removal, signaling renewed trust in the country’s financial integrity.

Vietnam’s Law on Digital Technology Industry

Vietnam became the world’s first country to pass a standalone law dedicated to the digital technology industry. The law was passed in June 2025; implementation begins in January 2026.

Here are the key highlights of Vietnam’s Law on Digital Technology Industry (Digital Technology Law):

Ambitious growth: Aims to create 150,000 digital tech firms by 2035 under the “Make in Vietnam” initiative.
Defined categories: The law separates crypto assets (like Bitcoin, Ether) from virtual assets (non-financial digital items), enabling more precise risk-based regulation per FATF guidance.
Strong incentives: Offers tax breaks, grants and import duty exemptions for startups, SMEs, and foreign tech investors.
Workforce support: Vietnamese digital experts get five years of tax exemption; foreign experts receive five-year visas and no work permit requirement.
AI and digital asset regulation: Introduces a risk-based AI framework and legal rules for crypto and virtual assets.
Regulatory sandbox: Allows controlled testing of blockchain, DeFi and virtual asset technologies to foster innovation.

A closer look at Vietnam’s crypto law

The law divides digital assets into two categories:

Virtual assets: Non-financial digital items used for exchange or investment. These exclude securities, central bank digital currencies (CBDCs), fiat currencies and traditional financial instruments.
Crypto assets: Digital assets that use encryption or blockchain technologies to manage issuance, transfer and storage. Like virtual assets, they do not include securities or CBDCs.

This classification of digital assets facilitates a structured legal framework that enables regulated use of these assets while differentiating these categories from mainstream financial products. It tasks the government with licensing, oversight and operational guidelines for each category, signaling a move toward transparency and compliance.

The law excludes securities, CBDCs, and traditional financial instruments from these categories.

Key changes for crypto startups include legal recognition, a framework for regulation and tax incentives. The law also includes provisions for pilot sandbox mechanisms for virtual asset products and services. Tax exemptions, subsidies and workforce training programs are available for blockchain startups.

Did you know? Vietnam’s crypto law allows authorities to collaborate internationally on digital asset fraud, improving cross-border investigations and curbing global crypto crime.

How Vietnam addressed FATF concerns

More than just a domestic milestone, Vietnam’s Law on the Digital Technology Industry represents a critical step toward aligning Vietnam’s digital asset sector with FATF standards on AML and Countering the Financing of Terrorism.

Key highlights include:

Crypto officially legalized: Vietnam’s 2025 law ends legal ambiguity by recognizing crypto ownership and use, aligning with FATF’s push for clear national regulation of digital assets.
Defined categories: The law separates crypto assets (like Bitcoin, Ether) from virtual assets (non-financial digital items), enabling more precise risk-based regulation per FATF guidance.
AML and CFT integration: Crypto exchanges and wallet providers will fall under state supervision, helping Vietnam address FATF concerns about weak customer due diligence and illicit finance.
Stablecoins excluded: Fiat-backed stablecoins are regulated separately under financial laws, ensuring consistent oversight and reducing systemic risk in line with FATF’s risk-based approach.
Regulatory clarity for businesses: Clear rules attract crypto startups and help formalize the sector, making it easier to monitor transactions, enforce KYC and reduce capital flight.

These reforms directly support Vietnam’s goal of exiting the FATF gray list by establishing a transparent, controlled crypto environment that is compliant with global standards.

The legislation also empowers the government to define licensing rules, asset classification and oversight mechanisms, ensuring crypto service providers and financial institutions operate within a regulated environment.

Through these measures, Vietnam signals its commitment to meeting FATF standards and regaining international trust in its financial ecosystem.

Vietnam’s new crypto law arms authorities against digital asset fraud

The law provides Vietnamese authorities with a clear legal framework to investigate, prosecute and deter digital asset fraud. Previously, the absence of legal tools hampered enforcement efforts. The law introduces compliance obligations such as identity checks, transaction monitoring and reporting duties.

Two recent fraud cases highlight the urgency of these reforms:

In February 2025, authorities arrested four individuals behind BitMiner, a fake crypto mining scheme that defrauded 200 victims of over 4 billion Vietnamese dong (~$157,300).

Tran Minh Quang (left), leader of the four suspects, was arrested

In December 2024, the Hanoi police disrupted a scam involving Million Smiles, which used deceptive ads to promote a cryptocurrency called QFS, resulting in losses of about $1.17 million.

Hanoi police raided Million Smiles headquarters

The law passed by Vietnam’s National Assembly includes AML and CFT measures, requiring crypto service providers to implement compliance procedures such as identity checks, transaction monitoring and reporting obligations.

Provisions of the law facilitate greater cooperation with international regulators. Vietnam facilitates collaboration with foreign authorities on cross-border investigations by aligning its crypto regulations with global standards.

This law is particularly important for addressing transnational crypto crimes, where assets and suspects often cross jurisdictions. By addressing legal gaps and enhancing regulatory coordination, Vietnam has bolstered its national enforcement efforts and reputation in the global financial community.

Did you know? Being on the FATF gray list doesn’t just hurt reputation; it can make foreign banks hesitant to work with domestic institutions, limiting capital flow and investments.

Opening the door to digital innovation

Vietnam’s new crypto law is part of its ambition to become a digital technology hub in Southeast Asia. By formally recognizing crypto assets, the government welcomes innovation and attracts global startups and investors.

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 R&D in semiconductors and cloud technology.

To support this ecosystem, the government is also investing in digital education through vocational programs, university-industry collaboration and tech apprenticeships, ensuring a skilled workforce for the future.

These combined efforts aim to establish Vietnam as a regional leader in digital innovation.

Vietnam’s global image and future FATF review

Vietnam’s cryptocurrency law is central to its FATF compliance strategy. By defining virtual and crypto assets and enforcing rules on licensing, AML/KYC, cybersecurity and transaction oversight, the country has aligned itself with FATF Recommendation 15, one of the key issues cited during its gray listing.

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

A clear regulatory environment also 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 improves access to capital markets and institutional finance.

Ultimately, Vietnam’s crypto regulation not only addresses FATF concerns but also enhances its global image as a transparent and innovation-friendly economy.