During the bull market when the market was going up from late March 2020 to mid-November 2021, crypto projects mushroomed, and despite being swindled by several projects, investors still somewhat believed in the ability to recover their losses by betting on other projects leading to further losses.
This behaviour can be attributed to the fact that investors often forget that crypto projects are just like any other startup that has a fail rate of over 90%. Overall, the current mindset will not favour investors, especially small retail investors, in the long term as they will be driven out by big players or whales given the manipulative nature of the crypto market.
Vibrant scene and educated people
Despite the challenges, Vietnam remains unique as a nascent and growing crypto hub in various aspects.
First, Vietnam will still have a substantial proportion (approx. 68-70% of the population) of working adults in the next ten to 15 years. Vietnam is also expected to have around 50% of its population in the middle class by 2030, making it one of the top 20 economies with the largest middle-class population. Being a young and technology-savvy population cohort, they are expected to drive crypto adoption further and in a more sustainable manner.
In addition, education is key to maintaining Vietnam’s position as a crypto hotspot. Vietnam is home to highly ranked universities in blockchain and crypto education such as RMIT University which ranked number two in blockchain globally.
Although crypto regulation in Vietnam might remain unclear in the short term, the Vietnamese government understands crypto assets may destabilise the financial system and the economy if left unregulated.
Therefore, it is likely that a clearer regulatory framework or direction will materialise in the next year or so, given the instruction from the deputy prime minister to the Ministry of Finance to complete the legal framework for virtual assets, cryptocurrencies, and virtual currencies in April this year.
Finally, the fact that Vietnam has been ranked number one in Chainalysis’ crypto adoption index for two years in a row shows that the Vietnamese are very willing to participate in the crypto space.
However, given the previous frauds and the current bear market when the market is going down, the crypto industry needs to enhance its credibility and show its relevance to the economy to retain and attract more users.
Much work to be done
As Vietnam plans to establish a modern, sustainable, and integrated national digital financial platform that will contribute to the growth of the economy, while ensuring macroeconomic stability and financial security by 2030, the country must take necessary actions to become a crypto hub that will have a favourable crypto regulatory framework and be home to world-leading crypto firms.