Cryptocurrencies have driven Vietnam's fintech boom: White paper

CRYPTOCURRENCY has been Vietnam's biggest winner in the financial technology (fintech) boom, a recent white paper has said.

This is even though the State Securities Commission of Vietnam banned all cryptocurrency-related activities this year, after a fraudulent initial coin offering (ICO).

"Demand for an alternative currency will continue to exist if the unbanked population remains high," the Singapore FinTech Association and United Overseas Bank said in their "FinTech in Asean: The Next Wave of Growth" white paper in November.

Vietnam has attracted US$3 million in fintech funding in the year to October 2018, with the paper noting that cryptocurrencies have seen the biggest growth.

Different markets in South-east Asia's fintech landscape have carved out their own niches, such as small-business financing and wealth management in Singapore, alternative lending in Indonesia and the Philippines, and payments in Thailand.

But new laws are expected to be finalised by year-end, which will regulate virtual assets such as blockchain technology, cryptocurrencies and ICOs, while watchers also expect a regulatory sandbox framework to provide fintech firms with more guidance and oversight.

The white paper noted that "limited access to banking services may have led to the demand for cryptocurrency in Vietnam from late 2017 to mid-2018", before the authorities' ban kicked in.

It cited a study's finding on how the dong was used by 15 per cent of cryptocurrency payment firms in 2017, compared with 10 per cent accepting the rupiah and 6 per cent taking the Singdollar. This was interpreted as an indicator of Vietnamese demand for cryptocurrencies.

Meanwhile, just 30 per cent of adults in Vietnam has transacted with a financial provider, less than half of the Asean average of 69 per cent, according to the United Nations.

"As emerging markets tend to have a large unbanked population and an under-developed financial infrastructure, cryptocurrencies can contribute to financial inclusion by facilitating payments in rural areas," said the white paper.