LEGAL SANDBOX FOR FINTECH ACTIVITIES IN VIETNAM
Updated: Jun 10
Fin-tech business activities in Vietnam so far has not had a legal basis to operate on, has not been prescribed in the Enterprise Law, nor classified in business lines according to the 2014 Investment Law. Except fin-tech operating in the intermediary payment sector, which is the function of the State Bank as provided for in the State Bank Law 2010, Decree 101/2012 of the Government (amended in Decree 80/2016) on non-cash payments. As a result, many Fin-tech have had to register operations in countries outside of Vietnam where there are already legal framework or testing legal mechanisms for fin-tech such as Singapore, Malaysia, Thailand, and some European countries like Estonia, Lithuania.
The State Bank of Vietnam (SBV) has finally published a draft Decree on the Experimental Mechanism for Financial Control (fin-tech) in the banking sector.
According to the draft of the new Decree, fin techs are expected to participate in testing activities in the fields of payment, credit, peer-to-peer lending, customer identification support, and an open application programming interface (Open API), innovative application solutions (such as blockchain), other services supporting banking activities (credit scoring, savings, capital mobilization,etc).
Fin-tech solutions, products and services participating in fin-tech testing mechanisms must all be in the field specified in this Decree, other cases will be decided by the Prime Minister on a case-by-case basis.
The time for testing fin-tech solutions is from 1-2 years depending on the specific solutions and fields, counting from the time of approval by the Prime Minister. Depending on the circumstances, the SBV will discuss with participating organizations to decide the scope of activities, including simultaneously or one of the following three factors: geography, transaction limit and number of customers participating in the transaction.
At the end of the testing period, the participating organizations must develop a final report, including information on the test output, success or failure test indicators, and test results, problem reports, resolve complaints, and what they have learned from the experience. Based on that, the SBV will summarise, report and submit the next solution to the Prime Minister.
The approval of institutions participating in the fin-tech testing mechanism does not mean that they are officially licensed by the regulatory authority, until “graduated”, or eligible to provide services to the market, then they would get the official approval from the Prime Minister.
According to the draft proposal proposing to develop the Decree on fintech-controlled testing mechanism in banking activities, the State Bank and related agencies are facing new challenges in state management with the appearance of fintech.
The attached link is the drafted decree in Vietnamese: https://www.lawlinkvn.com/post/d%E1%BB%B1-th%E1%BA%A3o-ngh%E1%BB%8B-%C4%91%E1%BB%8Bnh-cho-ho%E1%BA%A1t-%C4%91%E1%BB%99ng-c%E1%BB%A7a-fintech
Updated by LLVN. Photo from FinRei.