Vietnam proposes SME collateral law for digital assets

Vietnam's Ministry of Finance has proposed a significant legal revision that would allow small and medium-sized enterprises to use digital assets, virtual assets, and intellectual property as collateral for bank loans. The draft amendment to the Law on Support for SMEs, currently open for public consultation, seeks to address a longstanding credit gap for the nation's vast private sector.

Small and medium-sized enterprises, including household businesses, constitute over 98 percent of all enterprises in Vietnam but receive only about 20 percent of total bank credit. Officials attribute this disparity to a lack of eligible collateral, limited financial transparency, and the typically small capital base of most smaller businesses. The current lending framework heavily favors physical assets like land and buildings, leaving many technology startups and software companies, which often hold valuable patents and licenses, unable to secure formal financing.

The proposed changes would formally recognize a broader range of acceptable collateral, including future-formed assets, intangible assets, and rights in property. Beyond expanding collateral definitions, the draft law encourages...