When Vietnam took the historic step earlier this month to legally recognise digital assets, crypto entrepreneur Tran Huy Vu saw it as a long-overdue breakthrough and a promising development for local companies eyeing the fast-growing domestic market. But his optimism quickly gave way to concern over a separate set of draft rules for Vietnam’s pilot crypto asset market, which he fears could stifle innovation and create legal uncertainties for businesses like his own, Kyber Network. “Current regulations and draft rules are vague with a very broad scope of restrictions,” Vu, chief executive at Kyber Network, lamented to The Business Times. “For global-facing service providers like us, it remains unclear whether our operations would be considered compliant, or what specific steps would be required to ensure compliance.” Despite its vibrant crypto ecosystem, Vietnam is currently on the intergovernmental watchdog Financial Action Task Force’s grey list due to deficiencies in its frameworks to address money laundering and terrorist financing, including the lack of action to regulate virtual assets and virtual asset service providers. In response, Vietnam’s government has moved decisively over the past two years, most recently by passing a new law that officially regulates a wide range of digital and emerging technologies, including digital assets such as virtual assets and crypto assets; proposing a draft resolution that imposes licensing and requirements for crypto platforms; and issuing a draft decree setting out penalties for violations in the crypto asset space. Under the draft resolution being developed by the finance ministry and expected to be approved this year, Vietnam will allow only centralised service providers to operate – specifically those involved in proprietary trading or acting as intermediaries in the issuance, custody or trading of crypto assets.