Liechtenstein’s Blockchain Act: A Beacon for Crypto Businesses

Small in size but big on innovation, Liechtenstein is marking its territory in the blockchain and cryptosphere.

An article by Cointelegraph published earlier today reports that Liechtenstein, located between Switzerland and Austria, has captured the attention of the international and European crypto communities since the early days of the industry.

The Cointelegraph report points out that Liechtenstein was one of the first countries to introduce specific crypto and blockchain legislation, known as the Token and Trusted Technology Service Providers Act (TVTG) or the Liechtenstein Blockchain Act. This law, which took effect on January 1, 2020, set the stage for one of the world’s first regulated environments for token-related services. As the report highlights, the country has seen an increase in the number of crypto service providers since the law’s inception, attracted by regulatory certainty and open dialogue with the Financial Market Authority (FMA) in Liechtenstein.

According to Cointelegraph, the Blockchain Act was a milestone in the industry, providing a clear roadmap for categorizing and managing tokens based on their function, be it utility, security or payment tokens. This law clarified basic legal issues and set the stage for traditional financial institutions to use tokens.

It went on to say that with trends such as non-fungible tokens (NFTs) and decentralization becoming more widespread, the Blockchain Act remains incredibly relevant. Thomas Dünser, director of Liechtenstein’s Office for Financial Market Innovation and Digitization, maintains that the law is “open to innovation” and flexible, enabling it to accommodate new industry developments.

The upcoming Markets in Crypto-Assets (MiCA) regulation appears to be in line with Liechtenstein’s Blockchain Act, with no significant changes expected for the country once MiCA is implemented. Cointelegraph adds that the European Commission, like Liechtenstein, sees the token economy as a significant opportunity for Europe.

When asked about the potential for tighter regulations following the collapse of major crypto companies, Dünser stated that over-regulation should be avoided, but certain adjustments are necessary. Cointelegraph notes that Dünser highlighted the urgent need to close regulatory loopholes, especially those related to staking or lending and lending of customer tokens at crypto exchanges.