Promoting Malta as a blockchain island in Vietnam

Last week, I led a delegation of PKF staff members for a six day visit to Hanoi - the capital of Vietnam.  During the visit, I gave a presentation at the 5th Asia Offshore Forum held in a prominent hotel.

Other meetings were planned outside the two-day forum while also attending a blockchain Start-Ups event which featured over 400 attendees.  This is part of a two-pronged Asian drive to promote Malta blockchain and third country residence/visa opportunities for applicants in Vietnam and China.  

Vietnam is reputed to be one of the emerging Asian tigers with a seven percent annual growth in GDP and is poised to expand its influence in commerce having a relatively young population of about one hundred million.

In the field of blockchain technology, one observes that Vietnam lacks a proper legal framework which may prevent the country maximise benefits from the emerging industry yet according to CEO of Bigbom, a blockchain platform company, the Vietnamese government was reported to have expressed its intention to explore ways how to issue enabling legislation.  

One hopes this fully supports the development of the blockchain industry. Quoting Bigbom, a large number of Vietnamese people are not fully aware of the terms blockchain and cryptocurrency and often mistake them.  

Blockchain tech experts say, the use of technology in Vietnam could help industry users save 30-50 per cent of their expenses as those apps would help them improve the quality of production and transparency in finance and management.  

As can be expected, the tech community in Vietnam is booming due to a large talent pool of skilled developers. So far, one must admit that official recognition is slow since the country’s central bank has clearly stated that it does not recognize crypto assets as legal tender.

Still, one cannot but admire the progress done by members of the Vietnam Blockchain Club which aims to connect Vietnam business leaders, educators, policy-makers, regulators, tech entrepreneurs, for and not for profit organisations to get acquainted with the new technology.  

So how can Malta be of service to blockchain enthusiasts in South east Asia?  

Last year, the prime minister Joseph Muscat led a trade mission to encourage business opportunities in a number of sectors including crypto and blockchain applications. Why Vietnam?  This is a socialist-oriented market economy being the 47th-largest in the world measured in GDP and 35th largest in the world measured by purchasing power parity (PPP).  

It goes without saying, it is truly remarkable the swift transformation of the Vietnamese economy which over the last 25 years has reduced unemployment to single digits. I was enthusiastic meeting delegates at Vietnam Blockchain Start-Up event in Hanoi discussing how Malta is a pioneer country being amongst the first in Europe to welcome blockchain technology.  

Needless to say, Vietnam is also catching up with this revolution especially in the fintech sector and one expects it to promulgate various laws and regulations similar to the ones enacted in Malta last year.  

In this context, one cannot underestimate the merits of virtual currencies and tokens that in the future could be used for cross border payments, such as is happening in Malta through the use of the sandbox regime for remote gaming. This facilitates operators to exchange immediate and transparent transactions with players in VFA assets.  

Last year, Malta passed three VFA acts. The first one is termed the MDIA bill, which will provide for the establishment of the Malta Digital Innovation Authority as a central regulator. One expects that the law will guide government policy towards the industry and set the foundation stone for the development of Malta as a hub for new and innovative technologies.  

Another piece of legislation called the TAS bill, will set out the regime for the registration of Technology service providers and the certification of “technology arrangements”.  

This framework will allow for the registration of IT auditors and administrators of distributed ledger technology (DLT) platforms and their certification. It is complementary to the Virtual Currency bill which will set out a framework for initial coin offerings (ICOs) and the regulatory regime on licensing of White Papers compiled by issuers.  

Many agree that virtual currencies have become a global phenomenon that has also caught the attention of users in Vietnam. Delegates at the Blockchain Start-up event were interested to know about the regulatory prowess in Malta. It is worth noticing that the IMF recently conceded these virtual currencies are facing “technological” problems which could eventually be solved, and that as such they could be “easier and safer” to hold than paper bills in remote regions, or countries with unstable national currencies or “weak institutions”.  

It is true that Bitcoin had a bouncy ride start such that in a number of cases, exchange platforms have gone out of business or have failed - in some instances due to hacking by third parties. During the Start-Up event, speakers explained how a virtual currency represents the concept of value and can be used in framework as a medium of exchange, a unit of account and a value storage.  

However, it should be noted it does not have a link to any particular jurisdiction and, hence, doesn’t qualify for a legal tender status.  As it were, no jurisdiction guarantees the performance of its functions, which is only held together by the mutual consensus of the community of users.  

Paper and coin money, as we have traditionally been accustomed to, are referred to in various ways, as, fiat money and are recognised in the country that issues it.  

By contrast, one notes the uniqueness of a virtual currency that in itself does not entail prior authorisation by a centralised entity. Both a business trader and a customer can affect payments in a virtual currency without being entwined in the banking hegemony or intermediaries in the financial services market.

As can be expected in Vietnam which is an emerging market there is ample scope for e-wallets to be introduced since a high proportion of the population do not have access to bank accounts.

There are unique advantages when using virtual currencies in Vietnam to help cash flow issues in industrial, fishing, logistical and agrarian sectors. One appreciates that Malta can somewhat help Vietnam given that it has recently consolidated its legal framework on this industry.

It is now in a position to receive applications and license VFA agents and IT services providers while facilitating the licensing of “White Papers” issued by new ICO’s. The promotion of this expertise in Vietnam can pave the way for future cross-border consultancy projects.

Without doubt, the prime minister’s visit to Vietnam has oiled the wheels of progress for potential collaboration in this revolutionary technology.