Crash course: Vietnam’s crypto boom goes bust

Vietnam’s embrace of digital assets has shifted from euphoria to reckoning. After the country recognised digital currencies under a new law last year—bringing them into a formal regulatory framework—millions of retail investors and a vibrant startup scene surged into crypto. Now, a sharp downturn has left portfolios empty, startups retrenching, and a still-evolving rulebook struggling to keep pace.

For Hoang Le, a computer science student in Hanoi, the pivot came painfully. Encouraged by gamer friends, he traded from his dorm room and watched his holdings balloon to $200,000—around 50 times the average annual income in Vietnam—before collapsing to zero when the market turned. “When profits were high, everyone became greedy,” he reflected. The losses, he now calls “tuition fees.”

Unlike neighbouring China, which banned cryptocurrencies, Vietnam carved out a grey zone: digital coins are barred for payments but trading and speculation went largely unchecked. That permissive environment fueled one of the world’s highest adoption rates, with estimates suggesting about 17 million Vietnamese holding digital assets. What once looked like a first-mover advantage has become a source of vulnerability amid a deepening crypto winter.

Bitcoin has fallen nearly by half since a record above $126,000 in October, with many other tokens faring worse. Vietnamese startups across the spectrum—NFTs, blockchain-based lending, and trading platforms—have been battered, as bankruptcies and layoffs ripple through the industry.

A $100 billion market in flux

“Many companies have shut down because of this crisis,” said Tran Xuan Tien, head of Ho Chi Minh City’s blockchain association. Others, he added, are trimming teams and conserving cash to extend their runway.

Nguyen The Vinh, co-founder of blockchain firm Ninety Eight, said his company has laid off nearly a third of its staff since last year and expects more restructuring ahead. “The market will likely remain difficult for years, not just months, so we need backup plans.”

Vietnam’s crypto ecosystem expanded rapidly in a frontier environment, where speculative projects and outright Ponzi schemes rose alongside legitimate ventures. Authorities repeatedly warned the public about high risks and dismantled several large scams, including one alleged operation that took nearly $400 million from thousands of investors. Yet rather than clamp down wholesale, policymakers left a window for experimentation.

That stance has shifted toward firmer oversight under growth-oriented reforms. The new law recognising digital currencies took effect last month, and a five-year pilot program will allow domestic firms to issue digital assets. Still, investors and founders are waiting on detailed guidelines, from licensing to custody to consumer protections. The lingering ambiguity has prompted some Vietnam-based teams to register in jurisdictions such as Singapore and Dubai while maintaining operations at home.

‘Downhill badly’

Founders say the squeeze comes from both directionless markets and unsettled rules. Vinh noted that firms are downsizing or pivoting to survive. Huu, a 24-year-old building a crypto product, said fundraising has become far harder. Foreign backers once enticed by promises of 400–500 percent returns, he said, are now confronting the possibility of losing everything. “Over the past few months, things have gone downhill badly.”

Despite the gloom, many in the sector view the downturn as a painful but necessary reset that will weed out weak models and leave room for stronger, more compliant businesses. That’s thin comfort for retail traders: one market analysis suggests nearly 55 percent of individual Vietnamese crypto investors lost money last year.

Sentiment has soured accordingly. “In Vietnam, a lot of people trade crypto,” Huu said. “When prices fall, people complain about losses and the overall mood becomes very gloomy.”

For now, the country stands at a crossroads. Policymakers are tightening guardrails while leaving space for innovation, and founders are retooling to outlast the winter. The lesson from dorm rooms to boardrooms is the same: rapid gains can vanish just as fast, and prudent risk management matters as much as code and community. If Vietnam’s new framework brings clarity—and if builders focus on real utility rather than hype—the next cycle could see a more resilient industry take root. Until then, caution prevails.