March 15, 2024
Vietnam’s fintech industry is booming, and the rapid emergence of tech startups and non-bank institutions offering innovative financial services has been outpacing existing regulations. This regulatory gap not only creates uncertainty for both innovators and consumers, but also poses a number of imminent risks in areas such as consumer protection, data privacy, cybersecurity, and anti-money laundering, among others.
The State Bank of Vietnam (SBV) is stepping up to tackle these challenges by accelerating the promulgation of a long-awaited Fintech Sandbox Decree with the issuance of an updated draft (“Draft Fintech Sandbox Decree”) on March 4, 2024. The Draft Fintech Sandbox Decree establishes a controlled environment where fintech companies and financial institutions can test solutions that do not fall squarely within the parameters of existing regulations. The pilot activities will be limited in scope, scale, and duration, with a number of precautionary measures in place. The SBV will supervise this “sandbox” closely, effectively mitigating risks and gathering valuable data to inform future regulations.
Who Can Participate in the Sandbox?
Traditional financial institutions (credit institutions): Banks and other institutions licensed to provide financial services can participate in the sandbox to test new offerings or refine existing ones.
Independent fintech companies: Startups and established companies specializing in fintech solutions can leverage the sandbox to pilot innovative ideas before seeking wider market adoption.
Other relevant organizations involved in the pilot: Depending on the specific solution being tested, other entities may also be involved in the sandbox.
Geographical scope: Limited to Vietnamese territory; cross-border testing is not allowed.
Focusing on Three Solution Categories
Earlier versions of the Draft Fintech Sandbox Decree included categories like blockchain technology and other innovative business models, but these were removed in the latest version. To allow the SBV to assess the associated risks and work on the solutions more effectively, this version focuses only on the following