20 frequently asked questions about Blockchain

1. What is Blockchain?

Currently, Vietnam does not have any official documents defining Blockchain. However, according to definitions from international sources, Blockchain can be understood as follows:

1. Blockchain is an advanced digital ledger that allows for secure and transparent storage and sharing of information. The database is recorded and then stored in blocks, each of which is encrypted for protection and linked together to form a chain.
2. The data maintains chronological consistency because you cannot delete or modify the chain without network consensus. Therefore, you can use Blockchain technology to create an immutable ledger to track orders, payments, accounts and other transactions.
3. The system has integrated mechanisms to prevent unauthorized transaction entries and create consistency in how these transactions are commonly viewed.

2. What are the benefits of using Blockchain technology?

Blockchain technology is becoming a leading technological trend due to the following advantages:

1. Transparency and accuracy: Blockchain is a completely transparent ledger with all information recorded in chronological order and is immutable, reducing the likelihood of errors or mistakes compared to centralized databases or manual recording processes.
2. Security features: Data stored on the Blockchain cannot be manipulated in any form. The consensus mechanism enhances security by requiring network members to agree on the validity of transactions before they are added to the Blockchain.
3. Cost and time efficiency: Digitizing records and issuing them on a ledger eliminates intermediaries and automates verification processes through smart contracts, significantly saving transaction costs and processing time, and optimizing data integrity.
4. Wide applicability: Blockchain technology is encouraged for wide application in a variety of fields. For instance, it can be applied in food agriculture, education management, digital voting, and most notably in financial transactions.

3. What are the key policies of the State of Vietnam to apply and promote the development of Blockchain technology?

On 22 October 2024, the Prime Minister issued Decision No. 1236/QD-TTg (“Decision No. 1236”) regarding the National Strategy for the application and development of Blockchain technology until 2025, with an orientation towards 2030. Through Decision No. 1236, Vietnam has issued the following five key policies to apply and promote the development of Blockchain technology:

1. Establishing and completing a legal framework to create a favorable environment for the application and development of Blockchain;
2. Developing infrastructure and forming a Blockchain technology ecosystem;
3. Developing human resources for the Blockchain sector;
4. Promoting the application and development of the Blockchain technology market; and
5. Promoting research, innovation and international cooperation in the Blockchain sector.

4. How has the Vietnamese Government issued the Action Program for the 2024-2030 period regarding the development of Blockchain?

To specify the key policies for the application and promotion of Blockchain technology development mentioned in Question 3 above, the Prime Minister has issued an Action Program for the 2024-2030 period with the following main activities:

4.1. Completing the legal environment

1. Researching and evaluating the impact of current Vietnamese laws on Blockchain solutions and applications;
2. Proposing and issuing legal documents on Blockchain; and
3. Establishing a controlled testing mechanism (Sandbox) for Blockchain.

4.2. Developing infrastructure and establishing a Blockchain technology ecosystem

1. Building Vietnam’s Blockchain Infrastructure;
2. Developing concentrated information technology zones; and
3. Gathering Vietnamese digital technology enterprises to build Blockchain platforms to promote information sharing and enhance competitive capacity with foreign enterprises.

4.3. Developing human resources for the Blockchain sector

1. Incorporating Blockchain technology content into relevant training programs at educational institutions and universities; and
2. Enhancing the organization of Massive Open Online Courses (MOOCs) on Blockchain technology.

4.4. Promoting Blockchain development and application

1. Providing Blockchain-as-a-Service (BaaS) on Vietnam’s Blockchain infrastructure;
2. Promoting the application of Blockchain technology in the development of smart urban services; and
3. Strengthening the integration and application of Blockchain technology to optimize business processes and reduce operational costs.

4.5. Promoting research, innovation, and international cooperation in the Blockchain sector

1. Organizing laboratories and specialized research centers for Blockchain;
2. Organizing competitions to perfect the National Blockchain Platform;
3. Supporting agencies, organizations and individuals in registering for exclusive patent protection in Vietnam and globally to enhance Vietnam’s role in the international market;
4. Researching the application of Blockchain technology in the operation and development of the carbon market in Vietnam; and
5. Researching and applying Blockchain technology in e-commerce activities and trade promotion.

5. What are Vietnam’s key goals and orientations for the application and development of Blockchain technology by 2025 and 2030?

In general, Vietnam will leverage its strengths and develop national Blockchain infrastructure; promote innovation in the digital technology industry; complete legal frameworks; create a competitive environment; and position Vietnam among the leading countries in the region and the world in the application and development of Blockchain.

By 2025, Vietnam has set the following two main goals:

1. Establishing a foundation for Blockchain development; and
2. Promoting and enhancing the application of Blockchain.

By 2030, Vietnam has set the following five main goals:

1. Consolidating and expanding the national Blockchain infrastructure to provide services both domestically and internationally; issuing standards for the application and development of Blockchain in Vietnam;
2. Positioning Vietnam among the leading countries in the region and the world in researching, applying, and developing Blockchain;
3. Building 20 reputable Blockchain brands for platforms, products, and services in the region;
4. Maintaining the operation of at least three centers/special zones for Blockchain technology testing in major cities to form a national Blockchain network; and
5. Having representatives in the top 10 rankings of leading Blockchain training and research institutions in the Asia region.

6. How does Vietnamese law regulate personal data of users on Blockchain? Are there any property rights arising from such personal data?

Personal data is information in the form of symbols, writings, numbers, images, sounds, or similar forms in an electronic environment associated with a specific individual or helping to identify a specific individual. Personal data includes basic personal data and sensitive personal data.

Pursuant to the Civil Code 2015, assets include: objects, money, valuable papers, and property rights.

Therefore, it can be understood that user data on Blockchain, in particular, and user data on the Internet, in general, are not officially considered assets.

7. Do Blockchain providers have an obligation to protect users’ personal data?

Pursuant to Article 2.10 of Decree No. 13/2023/ND-CP, a personal data processor is an organization or individual that processes data on behalf of the Data Controller through a contract or agreement with the Data Controller.

Pursuant to Article 39 of Decree No. 13/2023/ND-CP, the personal data processor is responsible for:

1. Only receiving personal data after having a contract or agreement on data processing with the Data Controller;
2. Processing personal data in accordance with the contract or agreement signed with the Data Controller;
3. Implementing all personal data protection measures stipulated in this Decree and other relevant legal documents;
4. Being responsible for the data subject for any damages caused by the personal data processing;
5. Deleting or returning all personal data to the Data Controller after completing data processing;
6. Cooperating with the Ministry of Public Security and competent state agencies in protecting personal data, providing information for investigation, and handling violations of personal data protection laws.

Based on the above legal basis, Blockchain technology providers, as personal data processors under Decree No. 13/2023/ND-CP, are obligated to protect users’ personal data.

8. What are the principles of personal data protection in the use of Blockchain technology in Vietnam?

Decree No. 13/2023/ND-CP stipulates a number of principles to protect personal data in provisions of law as follows:

• Personal data is processed in accordance with legal regulations.
• The data subject is informed about activities related to the processing of their personal data, unless otherwise provided by law.
• Personal data will only be processed properly for purposes declared by the Personal Data Controller, Personal Data Processor, Personal Data Controller and Processor, and the registered third party, as stated in the declaration on personal data processing.
• Personal data collected must be appropriate and limited to the scope and purposes of processing. Personal data must not be bought or sold in any form, except as otherwise provided by law.
• Personal data is updated and supplemented in accordance with the processing purpose.
• Personal data is subject to protective and security measures during processing, including protection against violations of personal data protection regulations and prevention of loss, destruction or damage due to incidents, using technical measures.
• Personal data shall only be stored for a period appropriate to the purpose of data processing, unless otherwise provided by law.
• The Data Controller, the Controller and the Personal Data Processor shall be responsible for complying with the data processing principles set forth in Clauses 1 to 7 of Article 3 of Decree No. 13/2023/ND-CP and demonstrating their compliance with such data processing principles.

9. What are the most common technology applications based on Blockchain?

Blockchain is used extensively across various industries and purposes, including financial services, media, logistics, retail, and voting systems. Accordingly, Blockchain is used in the following applications/fields:

1. Virtual currency: Virtual currency is one of the most common fields using Blockchain today. When people buy, exchange or spend virtual currency, the transactions will be recorded on Blockchain.
2. Banking: Blockchain technology facilitates rapid bank transfers, enabling transactions to be verified more quickly outside of regular business hours.
3. Asset transfer: Blockchain technology can also be used to record and transfer ownership of various assets, such as NFTs.
4. Smart contracts: Digital contracts that are automatically executed once the conditions are met.
5. Supply chain monitoring: The supply chain includes a large amount of information, especially when goods are transported from one place to another around the world. Storing this information on the Blockchain will make tracing and monitoring the supply chain easier.

10. Is virtual currency recognized as currency by the State of Vietnam?

No. Pursuant to Article 3.10 of Decree No. 52/2024/ND-CP regulating non-cash payment instruments, including: checks, payment orders, remittance orders, direct debit, direct credit, bank cards (including: debit cards, credit cards, prepaid cards), e-wallets, and other payment instruments as prescribed by the State Bank of Vietnam.

Therefore, virtual currency is an illegal means of payment pursuant to Vietnamese law.

Additionally, Official Letter No. 5747/NHNN-PC dated 21 July 2017 of the State Bank of Vietnam also recorded as follows: “Pursuant to Article 17.2 of the Law on the State Bank of Vietnam 2010, Article 4.6, Article 3.7 and Article 6.6 of Decree 101/ 2012/ND-CP, virtual currency in general and Bitcoin, Litecoin in particular are not currencies and are not legal means of payment according to the provisions of Vietnamese law. The issuance, supply and use of virtual currency in general and Bitcoin and Litecoin in particular (illegal means of payment) as currency or means of payment is prohibited.”

Based on the above grounds, the use of virtual currency as a means of payment is not recognized and protected by law.

11. Is virtual currency recognized as a commodity by the State of Vietnam?

No. Pursuant to Article 3 of the Law on Commercial 2005, goods include:

1. All types of movable property, including movable property formed in the future; and
2. Objects attached to land.

In addition, Article 4.1 of the Law on Price 2023 stipulates that goods are products that can be exchanged, bought or sold in the market.

According to the regulations listed above on goods, virtual currency is not considered a commodity by the State of Vietnam.

12. What factors distinguish virtual currency from cryptocurrency?

13. When exchanging, buying, or selling virtual currency, do the parties have to fulfill tax declaration obligations with the tax authority? If so, on what basis?

No. Pursuant to Article 3 of the Law on Value-Added Tax 2008, the subjects liable to value-added tax (VAT) are goods and services used for production, trading, or consumption in Vietnam (including goods and services purchased from organizations and individuals abroad), except for subjects not liable to VAT as guided in Article 4 of Circular No. 219/2013/TT-BTC.

Accordingly, virtual currency is not recognized as goods pursuant to the Law on Commerce 2005 and Law on Price 2023. Therefore, virtual currency is not subject to VAT, and individuals trading virtual currency are also not obligated to pay personal income tax pursuant to Articles 2 and 3 of the Law on Personal Income Tax 2007.

14. What is a smart contract and how does Vietnamese law regulate this type of contract?

Smart contracts are sets of instructions coded into tokens issued on a Blockchain that can self-execute under specific conditions. Smart contracts are typically used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss.

In addition, according to an opinion stated in the e-Journal of the Supreme People’s Court dated 17 August 2022, a smart contract is fully understood as a special computer protocol capable of automatically executing the terms and agreements between the parties in the contract, based on the support of the Blockchain technology platform – a distributed, decentralized network. The terms in this type of contract are equivalent to a legally binding contract and are recorded in programming language.

In addition to the above contents, Vietnamese law has not issued any regulations to define smart contracts. However, in essence, smart contracts can be considered a civil transaction.

15. What are the differences between Smart contracts and Electronic Contracts?

Smart contracts and Electronic contracts are classified based on the following criteria:

16. Is a Smart contract required to meet all the content requirements of a contract according to the Civil Code 2015?

Currently, there are two viewpoints on recognizing the validity of Smart contracts as follows: the first viewpoint considers recognizing Smart contracts as having legal status equivalent to Traditional contracts; the other viewpoint is that Smart contracts should only be seen as a useful tool in supporting the fulfillment of obligations in contracts and civil transactions.

Pursuant to the Civil Code 2015, civil transactions conducted by electronic means in the form of data messages are considered written transactions. Therefore, from the first viewpoint, a Smart contract will need to satisfy the elements of a Traditional contract, including:

1. The parties participating in the transaction must have legal capacity and civil act capacity appropriate for the transaction;
2. The participants are fully voluntary;
3. The conditions regarding the purpose and content of the contract must comply with the law.

However, Smart contracts are created on the Blockchain platform, a decentralized environment not governed by any specific legal document. In addition, as mentioned in Question 14, Smart contracts have not yet been recognized by Vietnamese law. Therefore, there is still no solid legal basis to prove that Smart contracts must meet the basic content requirements in Article 198.2 of the Civil Code 2015.

17. How is Vietnam’s policy/law applied to Smart contracts?

Currently, Vietnamese law does not yet have specific regulations to govern this type of contract. Accordingly, the regulations governing contracts in the Civil Code 2015 can be applied to Smart contracts as follows:

1. Regarding legal validity: a contract is defined as an agreement between parties to establish, modify or terminate civil rights and obligations. Smart contracts essentially include terms encoded in code or programming languages formed through the agreement of the participating parties;
2. The validity of the contract: Like Traditional contracts, Smart contracts take effect from the time of signing, unless the parties have agreed otherwise. From the moment the Smart contract takes effect, the parties must execute the terms specified in the contract and the system will record all data during the execution process;
3. The method of civil transaction: Pursuant to Article 119.1 of the Civil Code 2015 stipulates: “Civil transactions through electronic means in the form of data messages according to the provisions of law on electronic transactions are considered written transactions.” Accordingly, Smart contracts can be considered a written transaction.

18. Can the parties modify the Smart contract?

Pursuant to Article 421 of the Civil Code 2015, contract amendments occur in the following cases:

1. The parties can agree to amend the contract.
2. The contract can be amended in accordance with Article 420 of the Civil Code 2015.
3. The amended contract must follow the form of the original contract.

For a traditional contract, the parties can agree to amend the contract. The element of agreement is emphasized and respected. However, modifying a contract can be a barrier to Smart contracts due to their immutability and the inability to modify them after the command lines have been encrypted.

19. When a dispute arises over a Smart contract where one party is a foreign organization or individual, do the Vietnamese Courts have jurisdiction to resolve it?

1. Pursuant to Article 469 of the Civil Procedure Code 2015, Vietnamese Courts have jurisdiction to resolve civil cases with foreign elements in the following cases:
   • The defendant is an individual residing, doing business, and living permanently in Vietnam;
   • The defendant is an agency or organization with headquarters in Vietnam, or the defendant is an agency or organization with a branch or representative office in Vietnam in cases related to the activities of the branch or representative office of that agency or organization in Vietnam;
   • The civil relationship case where the establishment, modification or termination of that relationship occurs in Vietnam, and the subject of that relationship is property within the territory of Vietnam or work performed within the territory of Vietnam;
   • Civil relationship matters in which the establishment, modification or termination of the relationship occurs outside the territory of Vietnam but is related to the rights and obligations of Vietnamese agencies, organizations or individuals or has headquarters and residence in Vietnam.
2. Pursuant to Article 470.1 of the Civil Procedure Code 2015, the following civil cases with foreign elements fall under the separate jurisdiction of Vietnamese Courts:
   • The civil case is related to rights to assets that are real estate located in the territory of Vietnam; and
   • Other civil cases in which the parties may choose a Vietnamese Court to resolve according to Vietnamese law or an international treaty to which Vietnam is a member, and the parties agree to choose a Vietnamese Court.

Thus, when Vietnamese law has not issued any regulations to define Smart contracts and if there is a dispute arising from a Smart contract, the disputing parties can consider these regulations to determine the settlement jurisdiction of the Vietnamese Court.

20. Are Smart contracts considered as evidence in resolving civil disputes at competent authorities?

Pursuant to the Law on Electronic Transactions 2023, electronic data is defined as data created, processed and stored by electronic means.

Pursuant to the Criminal Procedure Code 2015 and Civil Procedure Code 2015, electronic data is identified as one of the sources of evidence, used by the parties to prove the protection of their legitimate rights and interests in the process of settling disputes at the Court.

However, as mentioned in Question 14 above, Vietnamese law has not yet issued any provisions adjusting Smart contracts. Therefore, there is insufficient basis to determine that a Smart contract is a civil transaction conducted through electronic means in the form of data messages under the Law on Electronic Transactions 2023.

Therefore, Smart contracts do not contain electronic data and are not considered evidence when resolving civil and criminal cases according to Vietnamese law.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at info@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 09 January 2025

Writers: Chi Huynh, Tuyen Duong & Bao Pham