Unveiling Digital Financial Infrastructure in Vietnam: Stablecoins – Tiger Research

# Stablecoins in Vietnam: Bridging Financial Gaps Beyond Traditional Systems Stablecoins have emerged as a unique financial infrastructure in Vietnam, operating outside the realm of traditional banks and state-controlled financial oversight. They are frequently used by users for transactions, remittances, and asset storage through informal channels. However, Vietnam's fragmented regulatory response misses opportunities to leverage this reality into a strategic economic advantage. Integrating stablecoins into the formal financial system could position Vietnam as a competitive force in Southeast Asia's digital financial ecosystem. ## Growth of Stablecoin Market Amid Regulatory Disparity Vietnam consistently ranks among the top countries in the Global Cryptocurrency Adoption Index. Yet, the lack of clear regulatory frameworks hampers industry growth. Despite this, Vietnam's cryptocurrency sector remains predominantly retail-driven and rapidly growing, with the stablecoin market in its early stages. Vietnamese users often engage in stablecoin transactions through methods such as Binance P2P escrow trades, OTC mechanisms via Telegram, and direct P2P trades using self-custody wallets. This organic, retail-based growth lacks scalability. The absence of regulation hinders market transparency and stability, and relying solely on retail users for long-term growth introduces significant risks. Currently, Vietnam lacks legal and regulatory frameworks for stablecoins, leaving the sector with minimal policy discussions. This disconnect between market activity and policy exacerbates financial market risks and misses an opportunity to strengthen national competitiveness. A comprehensive report explores the practical financial activities involving stablecoins in Vietnam, including trading, remittances, and day-to-day payments. The study also examines potential risks arising from this regulatory vacuum and argues for policies that reflect market realities, thereby creating strategic opportunities for both users and the state. ## Widespread Use of Stablecoins in the Vietnamese Market ### Stablecoins as Tools for Trading and Liquidity Management For Vietnamese crypto investors, stablecoins are more than a fiat-to-crypto exchange medium. Many investors hold funds in stablecoins like USDT instead of converting back to Vietnamese dong (VND) after trade completion. These funds serve as reserves for subsequent transactions or as digital safe assets during market volatility, highlighting their use in liquidity management. Even during market downturns, Vietnamese investors opt to park their funds in USDT rather than converting to fiat currencies. During high volatility periods, USDT prices on Binance’s P2P marketplace often carry premiums up to 5%, exceeding the typical rate of 25,000–27,000 VND. This behavior underscores that stablecoins are perceived as independent value-preservation tools. This trend is persistent rather than temporary. From 2020 to 2025 (excluding crises like the FTX collapse or Terra-Luna incident), USDT prices in Vietnam consistently showed premiums over the official VND/USD exchange rates, with the 2024 average premium at 3.35%. These premiums indicate that investors use stablecoins to hedge against market volatilities and currency risks. A key driver of this trend is Vietnam's complex banking procedures and stringent regulations on fund withdrawals and remittances. Banking transactions often impose significant inconveniences and costs, prompting investors to create a parallel financial system anchored by stablecoins. ### Stablecoins as a Payment and Remittance Tool In Vietnam, stablecoins are extensively used for P2P payments and international remittances. Although cryptocurrency payments remain illegal, transfers are made through wallet-to-wallet transactions or OTC channels outside the official system. Vietnam ranks among the top five countries globally for remittances received via stablecoins, with approximately 7.8% of inbound remittances arriving as USDT or similar stablecoins. Conventional remittance solutions like SWIFT or Western Union carry fees of 5–7% and processing delays of several days. Stablecoins enable near-instant, fee-free transfers, making them an efficient alternative, especially for overseas workers and freelancers. For instance, Vietnamese e-commerce entities and freelancers often use USDT through platforms like Telegram for transactions. This stablecoin-enabled transfer method reflects Vietnam's reliance on informal cash systems in a digital format. Expanding online platforms have further propelled this payment method, extending its reach across borders. ### Stablecoins as a Store of Value Vietnamese citizens traditionally hedge against inflation and currency fluctuations by favoring assets like physical gold or U.S. dollars. Annually, Vietnamese households purchase 50–60 tons of gold, with predictions suggesting an increase to 70–80 tons by 2030. Despite high gold prices, local banks sold over 2 tons of gold during mid-2024 in a single week, showing gold's role as a long-term value store. Recently, stablecoins have emerged as digital safe assets, complementing or substituting traditional options like gold and dollars. USDT and USDC, commonly referred to as digital dollars, provide similar value preservation functions. While crypto payments remain illegal in Vietnam, individuals increasingly hold stablecoins for stabilization rather than transactions, reflecting their acceptance as a store of value. ## Strategic Regulatory Pathways for Vietnam: Aligning Policies with Market Realities Stablecoins have grown organically in Vietnam's shadow finance sector, facilitating liquidity management, P2P payments, and asset preservation outside traditional banks. As the government recognizes the digital finance industry's importance, efforts to establish a legal framework and regulatory sandbox for cryptocurrencies are underway. However, policies addressing widely adopted stablecoins remain underdeveloped. Prime Minister Phạm Minh Chính recently emphasized minimal governmental interference, stating, “What is not legally prohibited should be allowed, and the government should refrain from intervening in areas where citizens and businesses excel.” Adopting a market-friendly approach that integrates user practices into the formal system could balance regulation and innovation. ### Lessons from Neighboring Southeast Asian Countries While Vietnam struggles with regulatory ambiguity, its Southeast Asian peers have crafted practical regulations reflecting ground realities. These countries avoided Vietnam’s top-down "regulate if unsure, ban if uncontrollable" approach: - **Singapore:** Under its 2023 framework, the Monetary Authority of Singapore mandates 1:1 reserve backing, daily valuation disclosures, and face-value redemption guarantees for stablecoins, bolstering market confidence. - **Thailand:** Using a dual-track system, regulators support both foreign stablecoins (e.g., USDT, USDC) under licensed exchanges and a pilot project introducing baht-backed stablecoins, balancing foreign dependency with local innovation. - **The Philippines:** The Central Bank and SEC prioritize practical implementation over preemptive legislation by launching experimental projects (e.g., PHPC for remittances) and leveraging regulatory sandboxes in cross-border payments. These examples highlight the need for tailored regulations informed by local market dynamics. Without such adaptations, Vietnam risks entrenching unregulated financial systems further unaligned with official oversight. ## Conclusion: A Call to Action Vietnam's stablecoin ecosystem has emerged organically, filling gaps left by the formal financial system. Lacking access to official crypto trading channels, users have devised independent solutions encompassing P2P trades, OTC remittances, and digital asset storage through stablecoins. Initially seen as alternatives circumventing traditional systems, stablecoins now underpin Vietnam's burgeoning digital finance landscape. However, sustained ambiguity in legal and regulatory frameworks threatens to perpetuate instability and distort the financial market. Vietnam can draw inspiration from successful regional models, crafting regulations aligned with established user behaviors and existing economic realities. By embracing systematic, user-centric frameworks, such as introducing VND-backed stablecoins, Vietnam can enhance financial transparency, stability, and inclusiveness, positioning itself as a leader in Southeast Asia's digital finance ecosystem. If Vietnam seizes this pivotal moment, it can create a transparent, secure stablecoin environment, crucial for sustaining its digital economic ambitions.