Vietnam Launches Crypto Exchange Licensing with a $400 Million Capital Requirement

Published: 2026-01-22

Categories: Markets, News

By: Jose Moringa

The recently introduced pilot regime has sparked discussions within the financial community, as it appears to offer distinct advantages to domestic banks and securities firms. This regulatory framework, which is intended to foster innovation and stability within the financial sector, is notable for its approach to ownership rules and capital requirements. These elements are likely to shape the landscape of financial services and investment opportunities available to various entities, particularly by creating barriers that may limit participation from foreign firms and new entrants.

In the finance and investment sectors, a pilot regime typically refers to a temporary framework intended to test new rules and regulations. Such frameworks are crucial for assessing the viability and impact of new policies before they are fully implemented. The current pilot regime seems to embrace and reinforce traditional banking practices by favoring established domestic institutions, potentially stifling competition from international players and innovative startups.

One of the central components of this pilot regime is its ownership rules. By establishing specific criteria regarding who can own and operate within the financial landscape dictated by the pilot, the regime is designed to maintain a level of stability and control. Ownership rules can often dictate not only the types of entities that can participate but also the extent of their participation. This means that larger domestic players may have a more significant influence than smaller or foreign entities, who may struggle to meet these ownership criteria.

Capital requirements also play a critical role in determining who can effectively participate in the market. These requirements are typically established to ensure that financial institutions maintain sufficient financial buffers to withstand adverse economic conditions. However, when capital requirements are set too high, they can inadvertently create significant barriers for lesser-capitalized firms, including innovative startups and foreign institutions that might not yet have an extensive operational history or capital reserves to comply fully with the established regulations. Thus, while the intention behind these requirements is to promote stability, they can also hinder competition and limit opportunities for diverse market players.

From an economic perspective, the implications of favoring domestic banks and securities firms can be far-reaching. When competition is limited to established players, many potential benefits associated with a more diverse financial ecosystem could be lost. Such benefits may include increased innovation, enhanced customer service, and the overall democratization of financial services. New entrants often bring fresh ideas and technologies that can disrupt the status quo and enhance consumer choice, creating a more dynamic and responsive financial sector.

Moreover, a concentration of power among domestic banks can foster an environment where complacency takes root. It can lead to less incentive for existing institutions to innovate or enhance the customer experience. In contrast, a healthy competitive landscape pushes companies to improve their services, adopt new technologies, and cater to the evolving needs of consumers. The diversion of focus towards protecting domestic interests over encouraging robust competition suggests a reluctance to embrace the transformative potential that globalization and technological advancements offer to the financial sector.

The pilot regime may also inadvertently reinforce existing inequalities within the financial system. Smaller businesses and startups often face considerable challenges when seeking financing and investment opportunities, particularly when competing against larger incumbents. With domestic banks enjoying preferential treatment under this regime, obtaining financing or support may become even more challenging for innovative startups and entrepreneurs who seek to disrupt traditional financial models. This could hinder economic growth and innovation and stifle job creation, as these new businesses are often the engine of economic expansion and technological advancement.

Furthermore, the pilot regime's restrictions can lead to a disconnect between financing sources and the businesses that need them the most. As larger banks focus on maintaining their market share and profitability, they may be less inclined to take chances on smaller or riskier ventures that do not meet their stringent criteria. This could further exacerbate the challenges facing startups and smaller firms, creating a cycle of dependency on established financial institutions that may not be ideally suited to nurture the next wave of innovative companies.

In light of these considerations, it is essential for regulators to strike a balance between the stability and competitiveness of the financial system. It is imperative to create a framework that is conducive to encouraging competition while maintaining the necessary safeguards to protect the broader economic system. By creating a more inclusive environment, regulators can stimulate innovation, encourage diversity, and ultimately drive economic growth.

This balance can be achieved in several ways. First, regulators might consider revisiting the ownership rules and capital requirements to ensure that they are not unduly restrictive. By reducing some of the barriers to entry for new players, regulators can facilitate a more competitive landscape that encourages innovation and the introduction of new ideas. This can be done by implementing a tiered regulatory framework that takes into consideration the size and maturity of different market participants, allowing smaller and newer firms to operate under less stringent requirements while maintaining robust protections against systemic risk.

Second, fostering collaboration between established financial institutions and innovative startups can create synergies that benefit both parties. Large banks possess significant resources and infrastructure that can support the growth of emerging companies, while startups bring fresh ideas and agility that can help established players remain competitive. Encouraging partnerships and joint ventures can lead to mutually beneficial relationships that drive technological innovation and improve service delivery within the financial sector. Regulators can play a role in facilitating such collaborations by establishing programs that incentivize cooperation between incumbents and new entrants.

Third, regulators should also prioritize consumer protection and ensure that the financial ecosystem remains responsive to the needs of its users. This involves gathering input from various stakeholders, including consumers, businesses, and industry experts, to create policies that reflect the diverse needs of the financial marketplace. By ensuring that all voices are heard, regulators can craft a more inclusive and effective regulatory framework that not only protects consumers but also fosters a vibrant and competitive financial landscape.

As we move forward, it will be crucial for both regulators and market participants to remain vigilant about the evolving nature of the financial ecosystem. Rapid advancements in technology, changing consumer preferences, and shifting economic conditions are all factors that necessitate an adaptive regulatory approach. The pilot regime, while intended to cultivate stability, must also embrace the principles of competition and innovation to remain relevant in a dynamic market.

In conclusion, while the pilot regime offers certain advantages to domestic banks and securities firms through ownership rules and capital requirements, it is essential to remain aware of the potential consequences of these policies. By fostering a more inclusive and competitive financial environment, regulators can create opportunities for innovation, support diverse market players, and promote long-term economic growth. In doing so, they can ensure that the financial system remains robust, dynamic, and capable of meeting the needs of all stakeholders, ultimately contributing to the health of the broader economy.

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