Content & Analysis:
The High People’s Court has recently issued a cassation decision regarding a loan dispute worth tens of billions of VND, in which the collateral agreed upon by the parties consisted of a basket of cryptocurrencies/tokens.
The Court declared the security transaction invalid because current Vietnamese civil law does not recognize cryptocurrencies as lawful assets or goods eligible for pledge or mortgage.
This ruling has significant implications for foreign venture capital funds when structuring convertible loans for Web3 startups in Vietnam. During M&A due diligence processes, lawyers must immediately exclude such digital assets from the list of valid collateral to avoid the risk of complete loss in potential legal disputes.
Reference Source: People’s Court Journal