Digital assets in the context of the fourth industrial revolution, international integration, and Vietnamese law

Abstract

The legislative practice of many countries shows that, from a cautious attitude in recognizing this type of asset in law, many countries have issued legal provisions to solve arising problems including measures to handle situational, immediate, and detailed digital assets in the law to create an official and long-term legal basis to regulate legal relations related to digital assets. It can be affirmed that the formalization of digital assets in national law will create a legal basis for exploiting the values of digital assets, thereby encouraging the development of innovative enterprises, technological innovation; and this is also a basis for collecting taxes on profits earned from investment activities that contribute to shaping a trading market of a new asset. In the condition of having deeply integrated into the world economy and actively integrating into the world as well as adapting to the fourth industrial revolution, Vietnam needs to have a roadmap for implementation from the formalization of digital assets in the Civil Code to digital assets in business activities as well as digital asset transactions, in which priority is given to the recognition of digital assets as an asset in the Civil Code to “pave the way” for digital asset regulations in the business field and laws related to transactions, transfer, control and prevent crimes that may arise from transactions related to digital assets.

Keywords:

• digital assets
• the fourth industrial revolution
• international integration
• property law
• Vietnam

PUBLIC INTEREST STATEMENT

Description of the paper: Digital assets are a new scientific and legal issue, and there are legislative options to regulate social relations related to the creation, transfer, and access management to ensure the safety of the owner’s digital assets and facilitate the resolution of arising problems with related parties. Vietnam is one of the countries with large digital asset transactions, mainly Bitcoin and other electronic assets. The way to handle problems arising from digital asset transactions, especially the acceptance of electronic money as a means of payment or issuance of digital securities or cases of fraud to appropriate assets … by prohibition or non-recognition of digital assets is only suitable for case-based handling without thoroughly resolving the arising legal issues by clear and specific legal provisions. This study recommends choosing legislation that is suitable to Vietnam’s conditions to develop legal regulations governing legal issues related to digital assets based on analysis, evaluation, and comparison of legislative plans of some countries in the world.

1. Introduction

The fourth industrial revolution, which has profoundly impacted and influenced most areas of social life, creates many opportunities, but also poses many challenges (Min et al., 2018), is a social innovation (Morrar et al., 2017).The). In that context, if countries do not make changes to adapt in time, they will immediately become obsolete, even “abandoned” in the race for development, especially in digital trade (Yadykin et al., 2021). Characterized by unity, there is no boundary between the fields of technology, physics, digital, and biology based on digital technology platforms and smart-technologies integration. With this combination, many new products have been born, including digital assets that require innovation ecosystems to link with global value creation, thereby contributing to economic growth, sustainable trade, and investment at home and abroad. In other words, the fourth industrial revolution requires the international trading system to shift from e-commerce to digital commerce, where the cross-border data system will bring many benefits to consumers and be measurable (Drake-Brockman & (Lead author) et al., 2020). With new products existing in cryptographic form as digital assets, a new object of research in legal science is to clarify the nature and role of digital assets in the national property legal system.

The method of adjustment for digital assets in each country’s laws is inconsistent due to the dual nature of this type of asset. Formed based on technology as an intellectual product, human labor, if wanting to involve in digital asset transactions, individuals and organizations must have certain knowledge, especially knowledge related to science, technology, how to operate, manage, transfer ownership, or payment in transactions. Due to the utility and flexibility of payment transactions, digital assets accepted as means of payment have become more common, in addition to means of payment that are national currencies or widely accepted currencies in international payments. Seeking ways to “legitimate” digital assets through digital currencies as a new asset, an object of the Property Law (Allen, 2019) is a solution to ensure the consistency and effectiveness of the law in regulating the relationship between digital assets as well as financial assets (Boris et al., 2021).

Based on the birth history of digital assets, Nam and Khoi (2021) argue that when Satoshi Nakamoto published his article “Bitcoin—A peer-to-peer Electronic Cash System” to introduce and promote a peer-to-peer payment system that uses a distributed ledger system that combines cryptographic techniques and decentralized consensus mechanisms to store information. Since then, the term “virtual currency” or other names such as virtual assets, cryptocurrencies, or crypto assets, has stirred up the tech and business world, and at the same time, many legal issues have been posed for global lawyers, especially in clarifying the nature of digital assets. Digital assets are information that exists in the form of computer code (data messages) in a specialized information system that is acknowledged and used by a certain community to confirm the rights or interests of an entity, that is, digital assets that do not exist in physical form but only in the information system.

It is very necessary to establish a legal framework governing social relations relating to digital asset transactions nationally as well as internationally to fill legal gaps or legal, judge conflicts when resolving actual cases involving digital assets that can lead to confusion and unworkable conclusions (PrzemyslawPalka, 2016). The absence of legal provisions in regulation will create barriers to the development of digital assets in the context of countries that are trying not to miss the blockchain revolution, although there are still many doubts. To a certain extent, establishing a favorable legal environment for the development of this new technology will allow the distribution of crypto assets that are fundamental economic shares to countries that want to maintain their financial attractiveness (Ozturk, L., &Sulungur, E., 2021). Therefore, establishing a legal framework for managing digital assets is not only an effective measure in reducing risks for the relevant subjects (LintangYudhantaka, 2019) but can also contribute to establishing a digital asset trading market through tokens worldwide (Rosa M. Garcia-Teruel, Héctor Simón-Moreno., 2021; Fairfield, 2021). Practice shows that the operation of the digital asset market is much different from the normal asset market. With ordinary property, the owner has an absolute right to possess, use, and dispose of it; but with digital assets, its owner and the person who has the right to control the property are not always the same. Sometimes this situation can lead to a conflict of interest between the digital asset owners, family as well as heirs. The digital platform created or stored this asset when transferring the asset from the owner of the digital asset to the heirs (Edwards & Harbinja, 2013; Shah et al., 2020).

It is a fact that the management and ownership of digital assets are related to many different subjects, such as those between the inventor, the manager of the software program that creates digital assets, the user (the owner of digital assets), and transactions related to digital assets, such as payments, transfers … can lead to risks to stakeholders, including the status of digital assets used as a means for criminal acts such as money laundering (Kirkpatrick et al., 2021), fraud, transaction price fluctuations due to speculative factors, etc. Ishimaev (2017) relies on Penner’s asset theory and Hegel’s asset rights system and uses the example of bitcoin to show that blockchain effectively implements all the necessary and sufficient criteria for assets without relying on legal means. This conclusion poses a challenge in establishing a legal framework for digital assets in the process of digitizing the economy in each country.

In Vietnam, although it is not regulated in the current law, digital asset transactions still take place and always show a cross-border nature. Therefore, digital assets together with virtual currencies should be considered as “non-traditional” assets, i.e. digital assets are created by a combination of blockchain technology and cryptographic techniques to ensure the authenticity in certifying certain rights and interests of a subject. In the future, traditional concepts and principles of property law also need to be renewed to adapt to and meet the requirements of diversifying new forms of non-traditional assets in the revolutionary era—Industry 4.0 (Nam & Khoi, 2021). For example, Kateryna Nekit (2020) considers a social network account as a digital asset, based on the analysis of different countries regarding the determination of the legal fate of social network accounts as the deceased’s digital asset, etc, concludes that extending the property regime to social networks is an effective measure to protect the appropriate rights of social network users. Similarly, Mathias Klang (2004) also points out legal inadequacies in regulating avatars when interacting with others in online virtual environments.

2. Research methods

This study is developed based on a descriptive statutory approach through legal research (D.N. Pham, 2014). Law is understood as the rules and standards existing in society, regulating social relations arising in the creation, transfer, and ownership of digital assets to meet the requirements of proactively adapting to the Fourth Industrial Revolution as well as with the Project of perfecting the legal framework for the management and handling of virtual assets, crypto-currencies, and virtual currencies and National Digital Transformation Program to 2025, with orientation to 2030. The sources of law used for analysis include:

- Provisions on assets in the Civil Code No. 91/2015/QH13 dated 24 November 2015.

- Law No. 24/2018/QH15 dated 16 June 2018, on cybersecurity.

- Law No. 51/2005/QH11 dated 29 November 2005, on E-Transactions.

- Provisions on business investment capital contribution in Enterprise law.

- Decision 1255/QD-TTg dated 21 August 2017, by The Prime Minister on approving the Project on Completing the legal framework for the management and handling of virtual assets, cryptocurrencies, and virtual currencies.

- Decision No. 749/QD-TTg dated 3 June 2020, by The Prime Minister on Approval of the National Digital Transformation Program to 2025, with orientation to 2030.

Besides, this study is carried out according to the analytical-descriptive research method and a system of general research methods of social sciences (Anol Bhattacherjee, 2012), through studying research work that has been published. Secondary data sources are collected through library research or literature review published in professional scientific journals to clarify scientific points associated with digital assets. Finally, the comparative method is also used to clarify the concept and way of regulating the law on digital assets in some countries, as a basis for analyses, arguments, and recommendations in line with the reality of Vietnam.

3. Research results and discussion

3.1. Concept of digital assets and approaches in legal adjustment

Although digital assets have “virtual” properties, they assert their “real” value in reality through transactions. With the advancement of science and technology, digital assets such as Bitcoin or the recently proposed Stablecoins from BigTech, such as Diem (formerly Libra), are well accepted and used by the public as an alternative means of payment to central bank fiat money within certain communities (Chaum et al., 2021), and promises to appear more types of digital assets with values and increasingly diverse forms of expression (Chaum et al., 2021). Therefore, digital assets have become an indispensable part of social life and are gradually taking shape as valuable store assets. The existence of digital assets is not only in the system of “data messages“ or ”encrypted” but also in the amount of exchange value of virtual assets in transactions. Because it exists in a digital environment (virtual environment), the ability to identify digital assets through ‘legal signs’ is sometimes unclear (Nam & Khoi, 2021).

Most current studies have identified the emergence and existence of the phenomenon of digital assets as a result of the fourth industrial revolution which has a high-level combination of physical and digital hyperconnection systems with a focus on the internet, IoT, and artificial intelligence based on the digital system (Min et al., 2018). This is what has sparked debates about the legal nature of digital assets. Therefore, in the world today, there is no unified definition of both terminology and content (Phan & Nguyen, 2019) but the nature of digital assets is expressed in the environment of existence (cyberspace), associated with software technologies (which create virtual asset values), the internet (conditions for making virtual asset transactions), and attached to the rules of use that are related to the rights of the property owner.

In essence, digital assets are seen as the result of human creation in the form of “data messages”, which are durable, divisible, and transferable. The value of this property is mainly recognized by the user community based on the scarcity of supply and demand in this community (Phan & Nguyen, 2019). The state’s recognition or disapproval (from the perspective of management and social security) is not important, because these transactions still take place to pursue the purpose of making profits from transactions. Taking advantage of the greed and ignorance of the majority of participants in the digital asset trading network has given rise to more and more frauds and abuses of digital asset transactions to launder money as well as other illegal activities affecting the stability of the social environment. This places the responsibility of the state in preventing fraudulent acts (in creating and trading the digital assets) from appropriating the assets of transaction participants as well as the abuse of these virtual assets to launder money or perform other illegal acts which infringe upon the legitimate rights and interests of organizations and individuals in society … To perform well the responsibility of ensuring security and safety for digital asset transactions, it is necessary to have legal regulations to regulate these relationships, because the “application” of legal regulations closely related to the adjustment will not fully reflect the nature of digital asset transactions.

Depending on each country, there are currently three basic approaches to digital assets: (i) Floating, unmanaging although there may be some recommendations on the risks involved; (ii) Prohibiting the use and trading of virtual assets; (iii) Allowing the use and trading of virtual assets and guide related issues and often strictly manage intermediaries providing business services, especially exchanges (Phan & Nguyen, 2019). Each mode of adjustment has its advantages and disadvantages and does not have a common model for countries. Although the legal way of adjusting digital assets varies, to adjust the efficiency of virtual asset transactions, the law should pay attention to:

- Identifying digital assets must be placed in the digital environment, so it is not possible to consider asset digital assets as ordinary assets in civil law but need an open approach based on technology. One of the central issues when approaching and recognizing the concept of digital assets in national law is to ensure the consistency of its content and scope. The need for a specialized agency to “remove” the complexities of terminology and font style related to digital assets (Maxim Maxim Inozemtsev, 2020) is a recommendation to consider when building a legal framework for digital assets.

- Transactions for the sale and transfer of digital assets depend significantly on the security of the management system and the internet. Therefore, strong and secure technology infrastructure standards are a prerequisite for licensing businesses to supply and carry out digital asset transactions.

- Because of the close attachment to safety standards, the technical parameters are extremely sophisticated and complex, while not all participants in trading digital assets have the necessary knowledge to identify potential risks that may arise. In other words, preventing fraud and the abuse of ignorance of transaction participants for profiteering is the responsibility of state agencies, and it is considered a condition to ensure economic security and social order and safety (Le & Nguyen, 2021).

- The boundary between trading digital assets and aiding in money laundering and foreign currency losses is often very difficult because digital asset trading always takes place in a digital environment. Therefore, the signs of identifying the abuse of digital asset transactions for money laundering are contents that need to be strictly regulated with the coordination between commercial banks, mechanisms for coordination and sharing of information between state management agencies on currency and banking operations with the authorities in charge of detecting, preventing and investigating money laundering crimes.

3.2. Digital assets in Vietnam’s legal system

3.2.1. Regulations on digital assets: no regulations and numerous legal gaps

Legally, digital assets have not been explicitly recognized as property in the Civil Code 2015 and this is the cause of the difficulty in identifying and determining the legal nature of this property in transactions. In the sense that general law specifies the legal status and legal standards on the conduct of individuals and legal entities, as well as the personal rights and obligations, and property of individuals and legal entities in relationships formed based on equality, freedom of will, independence in property, and self-responsibility.Property is defined as objects, money, valuable papers, and property rights in Civil Code 2015. In terms of form, assets can be movable or immovable; current assets or future assets. The approach to property in the 2015 Civil Code has not changed much when compared to the approach to property in the 1995 Civil Code, or the 2005 CivilCode just replaced “including” with“is”, but during the amendment process, there is no information showing that there is a change in the content (Do, 2016) of the property concept. The content of the concept of property in the 2015 Civil Code is a “legal basis” that determines the legal nature and method of identifying a property in practice, and also causes disagreements when placed about digital assets. For example, there is a view that a digital asset is not an object because it only exists in computer data that is not real, and the owner cannot hold and manage this data at will but it depends on the existence of the host system. However, there is also a view that digital assets are intangible, and the computer code of digital assets can still be considered as things (Phan & Nguyen, 2019). This is also the view that virtual assets, even though they are “virtual”, are still an external image of information that exists in the form of computer codes. It is the different computer codes that make up different types of “virtual assets” and have unity between intrinsic properties and the external image as any other common asset. Since computer codes do not exist completely independently, it is not possible to exercise the right of possession like ordinary assets, but it can only exercise this right through the monetary value of that “virtual assets”. This is essentially no different from intellectual property, (which is intangible) and has been recognized as a property right. Similarly, the recognition of “virtual assets” as the codes recording the owner’s rights will be important in protecting and exploiting the benefits of “virtual assets”, and at the same time, solving many current controversial network resource issues (T.T.H. Pham, 2018).

In terms of practices, digital assets are a new issue and are attracting the attention of the whole society, especially when the value of many cryptocurrencies (as in the case of bitcoin) constantly increases and continuously sets value records due to quantitative limitations and the “immunity” to national economic fluctuations or external impacts (such as COVID-19) of “traditional” assets. There have been many science and technology enterprises established to provide virtual assets or provide an environment (software services) that connects virtual asset transactions. Many cases of participation in transactions, due to ignorance, have suffered many losses, in which there are many acts of fraud and abuse of trust to appropriate assets, causing damage to participants in virtual asset transactions. Leemakdej and Chiraphol (2019) produced pieces of evidence: “A Vietnamese cryptocurrency company raised US$660 million from 32,000 people before vanishing with the proceeds. Japanese police are investigating a US$68 million alleged cryptocurrency-based pyramid scheme. A case of fraud amounting to US$24 million ensnared a top Thai actor and a leading Bangkok stockbroker. In Singapore, investors in Bitcoin scams have lost at least S$78,000”.

Digital asset transactions in Vietnam, in which bitcoin is the main object, first appeared in Vietnam in late 2013 and early 2014 in two major centers, Hanoi and Ho Chi Minh City. Digital currency transactions have been growing in the lives of people, but informal crypto-currency transfer activities have not yet developed and have been still widespread in rural areas, along with other fraudulent and non-transparent activities (Dang, 2019). Moreover, there has been a phenomenon of fraud to appropriate assets (M.O. Nguyen, 2019; Phan & Nguyen, 2019). It is worth noting that the digital asset transactions that have taken place in recent years are mainly speculative, so they have attracted a lot of participants. This is evidenced by the fact that the Vietnamese dong is one of the eight most commonly used fiat currencies in real-world crypto-asset transactions (Phan & Nguyen, 2019). However, Vietnam does not have the necessary protection mechanism for the subjects participating in transactions. According to the experience of the Russian Federation, modern criminal law plays an important role in the legal protection of the digital economy, designed to form a system of legal mechanisms to ensure the protection of society from digital asset crime (Grigoryan, 2020; Vien, 2022a).

3.2.2. Exploiting digital assets through capital contribution to conduct business investment activities and transaction of digital assets

From the perspective of international trade, the rules of GATT and GATS do not foresee the development of new technologies, especially distributed ledger technology and digital assets which are the foundational technology for the formation and management, and trading of digital assets. This requires the rapid establishment of standards to form a minimum standard “environment” to establish harmonized rules for digital assets such as registration conditions, asset transfer, and rules of responsibility (Weber, 2020). In the United States, there was also a study on applying digital asset regulation in the tax and securities sectors, and recommending the development of a common business law for blockchain and network businesses (Cotler, B., 2023). To effectively exploit digital assets for business investment, especially in international business investment, countries must ensure network security as well as necessary institutions to protect digital assets (Chaisse & Bauer, 2019) as well as manage access to digital assets (Sjef, 2019). Digital asset transactions carried out in decentralized blockchain systems are seen as promising to create a wide range of applications, and promote new business activities, but also require the adjustment of appropriate commercial law to promote digital asset transactions based on clear and convenient regulations for making profits from digital asset transactions (Marek Dubovec, 2022).

In Vietnam, Enterprise Law No. 59/2020/QH14 dated 17 June 2020, stipulates that assets contributed as capital are Vietnam Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, and the technical know-how, other assets that can be valued in Vietnam Dong. In terms of principle, if digital assets are considered assets, they can be fully valued in Vietnam Dong and can be used to contribute capital to the business. However, as commented above, although the 2015 Civil Law does not have specific regulations on digital assets, asset transactions still take place, and the subjects participating in the transactions must exchange real money (fiat currency in Vietnam Dong or other foreign currencies) to own digital assets such as data messages, encrypted data segments, etc … Therefore, these assets are valued in Vietnamese Dong (in reality), but whether they can be used as a capital contribution asset, it is very difficult to be accepted in the context of “no specific guidelines”. This is a legal gap that needs to be overcome to ensure the realization of solutions to promote innovative start-ups, intellectual property, trade, investment, and business to facilitate the national digital transformation process and develop new products, services, and economic models based on digital technologies, the Internet, and cyberspace, while at the same time, become an obstacle to building a suitable management mechanism to the digital business-environment, thus creating favorable conditions for innovation according to Resolution 52-NQ/TW dated 27 September 2019, of the Politburo on several guidelines and policies to actively participate in the Fourth Industrial. In other words, this ambiguity inadvertently “forgot” an important financial resource among the population, because they had to exchange “real money” for ownership of digital assets with the desire to earn more profit than owning Vietnam dong, because, after all, ownership of digital assets is formed by labor, production, and legal business, through the creation of an object of intellectual property rights or the transfer of ownership as agreed(Clause 1, Clause 2, Article 221 of the Civil Law 2015). In that context, in addition to digital asset recognition, it is also necessary to define digital assets as a commodity according to Commercial Law and being allowed to be traded as a commodity on the market. Apriani et al. (2021) point out that digital assets such as social media, websites, and online marketplaces have effectively contributed to business operations during the Covid-19 pandemic. Thus, digital assets have been coming into business life, acting as effective tools to support the business activities of enterprises. In the condition that the value of digital assets is constantly increasing, if businesses use digital assets that they currently own as collateral for debts, it will create a legal gap to receive security by using digital assets. However, there is no clear legal regulation on digital assets, so no creditor will certainly take the risk to receive this collateral due to the potential risks that it can bring (Lehmann & Haentjens, 2023).

3.2.3. Digital asset management: Administrative intervention is mainly used

Digital asset management plays an important role and attracts the attention of many stakeholders. The strict level of digital asset management will help ensure the interests of relevant entities; on the contrary, if the digital asset management process does not care or is loose, there will be many hidden risks. This is even more meaningful in the current period; the process of digitization has been developing continuously and entering all areas of social life. Therefore, adjusting the law for digital asset management is a necessary condition to protect human rights in the process of building a digital economy and digital society. A database profile package that aggregates all necessary information related to digital asset transactions of terminal users is the core content of the digital asset management process. (Chimakurthi, 2020).

Garcia-Teruel and Héctor (2021) based on a comparative approach, argued that blockchain technology allowed the elimination of virtual intermediaries and automation of asset transactions, this can help to design future platforms, to facilitate cross-border transactions not only within the European Union but also around the world through “digital tokens“ or “color coins” to represent rights to ”real world” assets. It can be affirmed, looking for a digital asset management model with clear legal provisions need the attention of the state and is implemented quickly to avoid administrative interventions to handle short-term situations of an ad hoc nature.

The legal framework governing electronic transactions in the civil, business, and commercial sectors has been established and plays an increasingly important role in promoting more convenient and faster transactions. It is a fact that, if the issuance of detailed regulations on digital assets is not timely, it may cause difficulties in solving legal problems arising from digital asset trading practices. For example, in the United States, due to the delay in promulgating specific regulations for digital assets by the Federal government, regulatory agencies such as the Securities and Exchange Commission, Commodity Futures Trading Commission, and Internal Revenue Service, and market participants must apply existing regulations of the number of states that have enacted laws or specific regulations to digital assets to manage or solve the arising legal problems (Cotler, B., 2023).

Unlike other countries, in the absence of legal regulations, to manage digital asset transactions, regulatory agencies have had to impose administrative interventions in the direction of prohibiting transactions or not recognizing “virtual” values as assets. It can be affirmed that it is not necessarily a good solution to establish the social order as the state desires. Management methods for virtual asset transactions are only management and operation documents, inclined toward warnings to set orders without legal value as legal documents. Therefore, from the perspective of enforcement efficiency, these management and executive documents are difficult to set an order or prevent transactions, risks of transactions arising from virtual assets in social life. Specifically:

- In the field of management, provision, and use of Internet services and online information, the government has mentioned the concept of “virtual items” (Government, 2013). Based on this regulation, the Ministry of Information and Communications regulates virtual items limited to the scope of providing video game services. Accordingly, an enterprise providing video game services may only create virtual items, virtual units, and bonus points in a video game according to the content and scenario reported by the enterprise in the application file that is approved in video game content and scripts and periodic reports of enterprises. Enterprises providing video game services are obliged to manage virtual items, virtual units, and bonus points in video games according to announced game rules and following game content and scenarios that have been approved, and can only be used within the scope of the video game and for the exact purpose reported by the enterprises. Players can use bonus points or virtual units in their video game account to exchange for virtual items created by the video game service provider. It is worth noting that virtual items, virtual units, and bonus points are not assets, cannot be converted back to money, payment cards, coupons, or other artifacts of transaction value outside of the game, and do not allow the purchase and sale of virtual items, virtual units, or bonus points among players (Ministry of Information and Communications, 2014). Even so, values from virtual items, virtual units, and bonus points are still traded among players. Therefore, even though the state has banned it, the transactions of buying and selling virtual items, virtual units, and bonus points among players still take place; and the parties still recognized and ‘paid’ for these values of virtual assets in fiat currency—a legal asset is recognized in the Civil Code.

- For Bitcoin, an “underground transaction” object, which is growing in residential life despite many warnings about the risks as well as the risk of using virtual currency for criminal activity (money laundering, terrorist financing, illegal money transfer, tax evasion, fraud, etc) of the Government (The Prime Minister, 2017) and relevant state agencies (The State Bank of Vietnam, 2018; The State Securities Commission, 2018). In practice, despite these warnings, Bitcoin transactions go beyond national borders and are directly affected by the international Bitcoin exchange market. As a result of this cross-border trading situation, there is still a large amount of foreign currency being “transferred” to foreign countries to pay for Bitcoin—an asset, an object in international market transactions. In terms of form, these payment transactions can be completely paid through the banking system to ‘pay for asset purchases’ abroad; and obviously, the income from bitcoin trading is also not subject to personal income tax and value-added tax (People’s Court of Ben Tre Province, 2017).

3.2.4. Promoting cashless payments, the issuance of national digital currencies, and the future of digital assets

The project of developing non-cash payment services in Vietnam from 2021 to 2025 emphasizes the development of modern payment services, applying the achievements of the fourth industrial revolution to develop a variety of products, and payment services on a digitized platform, thereby ensuring safety and security, and bringing convenience to users, including the content of completing the legal corridor, mechanisms and policies on national cryptocurrencies (Minister, 2021). As a result, it helps develop non-cash payments based on new and modern payment products and services based on the application of core technologies such as open application programming interface platform (Open API), artificial intelligence, and big data analysis (AI, Big Data, Data Analytics), Cloud Computing, Biometrics; and promote the application of payment products and services on mobile devices, such as payment via QR Code, Tokenization, Mobile Payment, Contactless Payment, E-wallets; and encourage cooperation and connection between banks and FinTech companies to innovate, create, develop solutions, new payment models; and invest in development, reasonable arrangement; and increase functions and utilities on devices accepting card payments with appropriate and effective (Vien, 2022b).In that trend, digital asset recognition, including the concept of digital financial assets (cryptocurrency, token, digital currency), as one of the asset types can open up the possibility of legal regulation for other types of digital assets such as domains, virtual valued online games that currently exist or may appear in the nearest future (Boris et al., 2021; Gurinovich et al., 2021).

3.3. Digital assets, human rights issues, and transaction safety: Gaps and challenges

Rowena Rodrigues (2020) based on pointing out gaps related to policy and legal gaps, technical shortcomings, and multi-stakeholder shortages, has pointed out a series of influences on the human rights principle of artificial intelligence such as data protection, equality, liberties, human autonomy and self-determination, human dignity, human safety, informed consent, integrity, justice and equality, non-discrimination, privacy, and self-determination. The working mechanism of artificial intelligence is closely related to big data; they will create cross effects and their replication will exacerbate legal and human rights issues affecting each individual. This has also been clarified by Noto La Diega (2018) when emphasizing the user’s right to opt out of targeted advertisements while still achieving a balance between their interests and rights with the interests and rights of advertisement networks, publishers, and advertisers (advertising agencies). In the digital environment, personal data protection is always an important issue, because unintentionally or intentionally disclosing secure data to untrusted or unknown sources may result in data loss, alteration, and destruction (Greenwood et al., 2017). Differences in technology platforms can become a drag on efforts to access technology. The digital division and gap will become a human rights issue if digital inclusion is ignored in macro social work practice and policy advocacy (Sanders & Scanlon, 2021).

Legal aspects of digital assets about human rights related to the recognition of ownership rights to digital assets in the national legal system are considered a necessary legal guarantee and are discussed in many different aspects (Sjef, 2016, 2017). In principle, the owner (digital asset) has the right to access, use and transfer it to others. However, managing the process of issuance and transferring ownership is an extremely complicated issue, because the digital platforms that create it are implemented by many different entities, with different technology levels, depending on the complexity of the digital asset. The complex issues of digital asset ownership come not only from the author’s royalty aspect for digital assets (Nizamuddin et al., 2019) but also from the transfer of ownership of digital assets to heirs (Kharitonova, 2021) as well as related transactions. Human rights issues related to ownership of digital assets need to be thoroughly addressed as the digital assets of the deceased such as social media platforms and digital accounts contain a variety of digital assets of personal value or an individual’s currency upon death need to be transferred to heirs and stakeholders (Palmer, Stephanie G., 2018). Digital asset transactions in the market show that it is being implemented in a decentralized market, thus causing many costs and inefficiencies. (Aspris et al., 2022) and also containing potential risks for the parties involved in the transaction.

In Vietnam, property ownership is a basic human right enshrined in the Constitution and laws related to property. As a country under the influence of the Continental European Law system, in the state management as well as in the practice of social life, the absence of regulations on a certain issue will cause many difficulties for state agencies in understanding and applying appropriate handling measures. Administrative measures such as prohibition or non-recognition do not reduce or ensure more security in digital asset transactions because it still takes place in real life. In the cyberspace environment, where people perform social acts that are not limited by space and time, there will always be countless potential risks, so transactions are secured, including digital assets have been specified in: i) Law No. 24/2018/QH15 dated 16 June 2018, on cybersecurity and ii) Law No. 51/2005/QH11 dated 29 November 2005, on E-Transactions. However, Law No. 51/2005/QH11 dated 29 November 2005, on E-Transactions was promulgated and applied in the period when science and technology and the application of technology have not yet been popular. Measures to ensure network security have been mentioned, including the responsibilities of enterprises providing services in cyberspace and the responsibilities of organizations and individuals using cyberspace. Legal issues related to digital asset mining (bitcoin mining) or infrastructure investment for digital asset mining have not yet been accepted as a form of investment. In addition, the choice of technology to manage digital asset transactions has not been mentioned, while in other countries, using Blockchain technology to manage digital asset transactions has been mentioned by many studies.

3.4. Legislative choice for adjusting the relationships arising in the creation, use, and transaction of digital assets in Vietnam

Digital assets are formed based on blockchain technology, known as tokens, which represent a standardized digital asset. This token can represent anything: from cryptocurrency (for example, bitcoin, Ethereum, litecoin) to stable coins (tokens represent physical goods deposited with third parties, such as national currencies, precious metals, etc), or just simplify the voucher to access a service (called a utility token) to dematerialize an asset, even a small piece of art (Schichting & Petrini, 2019).

Leemakdej and Chiraphol (2019) pointed out that blockchain technology has been used as a means to commit fraud or other wrongdoing while the victims themselves, the regulators have hardly recognized from the very beginning in several countries in Asia. To balance the interests of regulators, issuers and investors with digital assets, Japan, Singapore, and Thailand have introduced progressive and prudent supervision. Specifically, the Financial Services Agency of Japan introduced a regulatory framework in early 2017 and since then it has been revised to include more investor protections aimed at mitigating specific risks for cryptocurrencies, including fraud, hacks, and margin increases. In Singapore, the Monetary Authority of Singapore has issued strict guidelines for digital assets. The digital token constitutes a product regulated by securities laws set forth by the Regulatory Authority. The offering or issuance of digital tokens is subject to applicable securities laws. In Thailand, crypto-currency business activities are regulated by Digital Asset Business Decree, and the main regulator is the Office of the Securities and Exchange Commission. Toygar et al. (2013) argued that digital asset regulations in the US states were not sufficient to regulate issues related to digital assets that are evolving and it was necessary to enact the “Federal Cyber Act” to regulate “Digital assets” and other cyber issues.

From the way to issue regulations to solve digital asset-related issues in countries, it shows that, in addition to issuing regulations to fill legal gaps and immediately solve legal issues related to digital asset transactions to meet the requirements of protecting the rights of digital asset owners and maintaining social order, countries also have long-term solutions towards the complete and long-term solution of problems related to digital assets. Legislative decisions must not only deal with what is happening about digital assets in their own countries but must also step by step reach global agreements on standards for digital assets.

In the current conditions, the choice of a legal model for adjusting digital assets is essential because it not only solves open issues but also contributes to attracting new resources (digital assets) for investment, business, and innovation activities in Vietnam today. Identifying fully and accurately the nature of digital assets; their relationship with real property and real money; the role of digital assets and their impact on the law; … are a foundation for protecting the legitimate rights and interests of domestic and foreign investors in Vietnam; effectively limiting, preventing, and controlling the involved risks and abuses; concretizing the institutions on property rights in the Civil Code 2015 in the field of virtual assets, cryptocurrency. This is one of the views to complete the legal framework for the management and handling of virtual assets, cryptocurrencies, and virtual currencies defined in the Project to complete the legal framework for Management and Handling of Virtual Assets, crypto-currencies, and Virtual Currencies approved by the Prime Minister (The Prime Minister, 2017). In other words, establishing a legal “identity” for virtual assets through clear regulations is the right thing to do in the current period. Because, whether prohibited or not recognized, the transaction of digital assets will not take place. The risk warnings have not carried much weight to the public’s willingness to invest in the face of the lure of investors creeping into real life as well as information channels to promote in the digital environment.

To determine the “legal identity” of digital assets, it is necessary to define the content of the concept of digital assets to determine the scope and classification for appropriate adjustment. Toygar et al. (2013) emphasize that tangible and intangible assets are both defined, managed, and protected by United State law, but “digital assets” is a new concept, so the legal definitions and regulation are currently insufficient to properly identify, protect and regulate digital assets because digital assets contain many different digital properties and activities in the current cyber world. Gurinovich et al. (2021) based on the systematization of academic opinions, the international and national laws on the relationship between digital financial assets and digital assets point out that the concept of digital assets, which includes digital financial assets such as crypto-currencies, tokens, digital currencies and other digital assets such as domain names, virtual values in online games, are existing or may appear in the future. Therefore, defining the content of the concept of digital assets, in addition to shaping the regulatory scope of the law, also contributes to the development of civil law (M.I. Inozemtsev, 2021).

From the practice of legislative options in other countries and Vietnam, there are two legislative options for regulating legal issues related to digital assets:

Firstly, enact a separate law on digital assets to establish general principles in determining digital assets in other specialized fields of law such as digital financial assets, financial assets such as “social media accounts (Facebook, Twitter, LinkedIn, etc.), online photo albums (Flickr, Picasa, etc.), blogs, domain names, websites, email accounts, smartphones or any information stored in the cloud or computers. In reality, digital images, photos, documents, audio and video files should be considered “assets‘ because they are real and contains monetary and personal values’ (Toygar et al., 2013). This legislative option has the advantage of helping to establish general principles, as a basis for concretizing to recognize, register or establish legal procedures to recognize, manage and perform digital asset transactions. However, this legislative option requires long-term and careful preparation, and there is always the risk of being ”outdated” due to the strong development of technology platforms that are the basis for the creation of digital assets. In addition, the cost of enacting a digital asset law could also become a reason to reject this legislative option.

Secondly, issues of property, ownership, and transfer of assets, in which digital assets are governed by the Civil Code, thus the second legislative option, which is also the best option, is officially regulating digital assets and assigning the Government, within the scope of its functions, tasks, and powers to issue regulations to provide detailed guidance on regulating legal issues related to digital assets. Specifically:

- Supplementing “digital assets” in addition to the assets recorded in Article 105 of the Civil Code 2015, and assigning to the Government detailed guidance on this type of asset. This method both ensures the consistency of the law and creates a legal basis for the Government to detail the necessary contents to adjust the relationship arising in the creation, use, and transaction of virtual assets. This is explained by the fact that the debates about the nature of digital assets have been recalling core issues related to the philosophy of Vietnamese property law, such as the basic principles of real rights, the relationship between real rights and things, or legal technical issues such as the definition of assets in the direction of listing or classifying, classifying assets, the relationship between the Civil Code 2015 and the specialized laws on each type of property (D.P. Nguyen, 2020; Tran & Nguyen, 2020).

- Based on regulations on the competence of the Government in the economic field related to ensuring macroeconomic stability; promoting the potential of economic sectors and social resources for rapid and sustainable development of the national economy; creating, fully and synchronously developing market factors and ensuring the effective operation of all types of markets, including the science and technology market, and exercising the right to decide, direct, and organize the implementation of socio-economic development strategies, master plans, and plans …, the Government promulgates a decree which details and guides the implementation of transactions on virtual assets by the management requirements and objectives of the country’s socio-economic development in the current period. This method will immediately solve the need to manage virtual asset transactions, and gradually create a transaction order as a practical basis for legislative proposals to be submitted to the National Assembly to amend and supplement the Civil Code on virtual assets.

- Researching to develop a legal framework for exploiting the useful values of digital assets as an asset to contribute capital for business investment activities, as a commodity on the market, that need to start recognizing digital assets, including crypto-currency, as assets, and being the common trend in the world. This is not only consistent with general theories of assets and ownership, but also in response to cryptocurrencies’ development practices, promoting overall economic development (D.P. Nguyen, 2020). In an analysis of Indonesian legal regulations on cryptocurrencies, a specific form of digital asset, and the practice of operating cryptocurrency exchanges, Chang (2019) has made recommendations to establish a legal framework for the cryptocurrency market and operate Vietnam’s digital asset trading market in the future.

- Selecting technology platforms for the management, use, and support of the implementation of digital asset transactions as well as quickly supplementing the legal provisions on protecting investors and consumers in digital asset transactions as a commodity in the market.

4. Conclusion

In Vietnam, digital transformation is an irreversible trend with the main content that is the transition from the traditional way of life and way of working with entities to the way of living and working with entities and their connected digital versions in the digital space (Ho, 2020) with a vision to 2030 to become a digital, stable, and prosperous country, pioneering the testing of new technologies and models; innovating fundamentally, comprehensively the management and administration of the Government, production, and business activities of enterprises, people’s ways of life, ways of work; developing a safe, humane and widespread digital environment (The Prime Minister, 2020). When digital transformation is successful, the different aspects of the digital social environment will continue to appear as necessities, including digital assets. The delay in enacting legal regulations to govern digital asset relations will create legal gaps and inconsistencies in the national legal system. This is an ongoing reality in Vietnam. It can lead to consequences:

- For the State, even if administrative measures are applied through the promulgation of prohibitions and limits, digital asset transactions still take place, and because there are no legal provisions to determine the nature of assets that are non-taxable goods, they can cause tax losses from transactions.

- The national economy lacks attractiveness due to the lack of regulations to attract investment in digital assets, in which digital financial assets are one of the new investment trends, meanwhile, the interests of investors and the rights of owners of digital assets are not protected by effective legal instruments.

- For the participants in the transaction, the absence of regulated regulations will cause legal risks to transactions, especially when disputes arise, it will lead to inconsistent interpretations or the promulgation of regulations that are not feasible and inconsistent with practice.

- Discouraging businesses from accelerating the innovation process and not showing proactive adaptation to the fourth industrial revolution. It means that the national digital transformation process has not achieved the expected effect.

Vietnam’s legislators need to quickly issue regulations on digital assets as objects of ownership and as commodities circulated in the market. If this solution is implemented, the national digital transformation strategy, including digital transformation in the new economy, achieves the set goals. Regulations related to digital asset standards as well as measures to ensure the security, safety, and access management of digital assets also need to be considered for promulgation soon to protect the interests of all parties and maintain social order.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The authors received no direct funding for this research.

Notes on contributors

Vien the Giang

Vien the Giang is a lecturer at the Ho Chi Minh the University of Banking, Ho Chi Minh City, Vietnam. His research fields include Banking Law, Financial Law, Regulations for Digital Transformation, and Legal Education.

Vo Thi My Huong

Vo Thi My Huong is a lecturer at the University of Technology and Education, Ho Chi Minh City, Vietnam. Her research fields include Environmental Law, Business Law, and Green Credit Law.