View of the State Bank of Vietnam on P2P lending

On 8 July 2019, the State Bank of Vietnam (SBV) expresses its view and recommendation to credit institutions in Vietnam (CIs) on peer-to-peer lending activities (P2P Lending). The SBV’s view is as follows:

·       P2P Lending is built on a digital platform which connects borrowers and lenders without having to go through financial intermediaries (such as CIs). All lending activities will be recorded on the platform.

·       The SBV acknowledges that P2P Lending is not specifically regulated by current regulations.

·       Besides its potential to create additional way to mobilize capital, P2P Lending can give rise to the following risks: (1) misleading information provided by P2P Lenders about the product’s safety, (2) the lack of oversight on P2P Lending’s platform in terms of cybersecurity, (3) P2P Lenders’ using customer information for predatory lending activities, and (4) P2P Lending being considered as activities of CI.    

E-signatures v.s. digital signatures under Vietnamese law

Under the Law on E-Transactions, an e-signature (chữ ký điện tử) is defined as being created in the form of words, script, numerals, symbols, sounds or in other forms by electronic means, logically attached or associated with a data message, and being capable of identifying the person who has signed the data message, and being capable of identifying the consent of that signatory to the contents of the signed data message.

According to Article 24.1 of the Law on E-Transactions, an e-signature of an individual affixed to a data message will be legally equivalent to the signature of such individual affixed to a written document if:

·        the method of creating the e-signature permits to identify the signatory and to indicate his/her approval of the contents of the data message; and

·        such method is sufficiently reliable and appropriate to the purpose for which the data message was originated and sent.

Accordingly, if an user being an individual of an e-commerce website, who can be identified by his/her username, password, and other means of verification (e.g., OTP code), clicks on a confirmation button of an online order then such action can be regarded as creating and affixing an e-signature to the online order by the individual user. This is because:

Technology Transfer in Vietnam - Is “technology” a property?

The Law on Technology Transfer 2017 is drafted based on the assumption that a technology (công nghệ) can be transferred as a property (tài sản). But in light of the provisions of the Civil Code 2015, one may have to ask whether technology is a property?

Transferring technology means the transfer of the ownership or the use right of a technology from a transferor to a transferee. In addition, Article 7 of the Law on Technology Transfer 2017 says that the owner of a technology may assign its ownership or license its use right of the technology. Therefore, the Law on Technology Transfer 2017 implies that, to transfer a technology, the transferor must have the ownership of such technology. Under the Civil Code 2015, ownership can only be created upon a property. Thus, the technology under the Law on Technology Transfer 2017 should be a property.

However, technology as defined by the Law on Technology Transfer 2017 may not be a property. Article 2.2 of the Law on Technology Transfer 2017 defines technology as a solution (giải pháp), process (quy trình), and know-how (bí quyết) which can turn resources into products. Article 105 of the Civil Code 2015 says that property comprises objects (vật), money (tiền), valuable papers (giấy tờ có giá), and property rights (quyền tài sản).

The definition of technology suggests that technology is something intangible. Therefore, it is not an object. For the obvious reason, technology is not money, or a valuable paper.

Then can a technology may be property right? Solution, process, and know-how is arguably not a right. But a right to solution, process, and know-how can be property right. Article 115 of the Civil Code 2015 says that property rights are rights being able to be valued in terms of money, including property rights in respect of subjects of intellectual property rights, land use rights and other property rights. Accordingly, a transfer of technology should be considered as a transfer of rights to such technology.

Solution, process, and know-how can be the subjects of intellectual property rights. Therefore, a right to technology can be intellectual property right, thus, a property right. However, the law is not clear whether there is any money-worth right other than intellectual property right can be created upon technology?

This post is contributed by Ha Thanh Phuc, a trainee at Venture North Law.

Regulations on digital wallets in Vietnam

Digital wallets are an important tool for the development of e-commerce and fintech industries. The State Bank of Vietnam (SBV) has issued certain regulations on digitial wallets. However, these regulations seem to be inadequate.

Under Decree 101/2012, a digital wallet is regarded as a payment intermediary service (dịch vụ trung gian thanh toán) whereby the wallet user is issued a digital account associated with an electronic media (e.g., a mobile phone) and containing a monetary value. The monetary value in a digital wallet is secured by monies transferred from the user’s bank account to the wallet service provider’s account. User can only inject and withdraw cash from a digital wallet through the user’s account. Monies in the wallet service provider’s account can only be used to pay for goods or service providers or to return to the wallet user. The Law on Anti-money Laundering 2012 requires a digital wallet service provider as a financial institution with new technology to meet face-to-face with its clients when the clients first make a transaction with the service provider.

In light of the above regulations,

  • An user without a bank account cannot have a digital wallet in Vietnam. This could hinder the growth of digital wallet.
  • Direct money transfers between two digital wallets are not permitted. In practice, the SBV is allowing certain digital wallets to conduct direct monies transfer on a pilot basis.
  • An user cannot withdraw cash or inject cash directly to his/her digital wallet. This must be done via a bank account.
  • Monies in a digital wallet may not be used as security for lending.
  • A digital wallet provider is required to meet face to face with its customer whenever a wallet is issued. 

5 September 2018 - Update to reflect the requirements under Anti-money laundering regulations.