Cryptocurrency Compliance Challenges in Liechtenstein Addressed with New Law
Liechtenstein has made history by introducing comprehensive regulations for the token economy, paving the way for increased legal certainty and stability in the cryptocurrency market.
The Token and Trusted Technology Service Provider Act (TVTG)
On October 3, the Liechtenstein Parliament passed the TVTG, a groundbreaking law that marks a significant milestone in the country’s financial market strategy. The law aims to regulate civil law issues related to client protection and asset protection, establish adequate supervision of service providers, combat money laundering, and provide clarity on digital securities.
Defining the Term “Token”
The TVTG defines the term “token” as a new construct that enables the transformation of the “real” world onto blockchain systems, ensuring legal certainty and opening up the full application potential of the token economy. The law requires service providers to be registered with the Liechtenstein Financial Market Authority (FMA) and meet minimum requirements for activities on blockchain systems.
Applications of Blockchain Technology
The applications of blockchain technology are not limited to simple transactions between private individuals but provide a range of economic services, including:
- Digital recording of means of payment or assets
- Conducting transactions without intermediaries
The law aims to strengthen legal certainty for users and service providers in the token economy, supporting its positive development in Liechtenstein.
Adaptability and Legal Clarity
The TVTG is designed to be adaptable to future technology generations, using the term “transaction systems based on trustworthy technologies (TT systems)” to ensure applicability. The law also clarifies essential legal questions related to tokens, such as:
- The legal effect of transferring tokens with regard to represented rights
Customer Protection and Anti-Money Laundering Measures
In addition to regulating the token economy, the TVTG aims to improve customer protection and combat money laundering by requiring service providers to apply due diligence obligations and adhere to international standards.
The Way Forward
The introduction of the TVTG is expected to address compliance challenges in Liechtenstein’s cryptocurrency market, providing a clear regulatory framework for service providers and users alike. This milestone marks a significant step forward for the country’s financial market strategy, positioning Liechtenstein as an innovative and legally secure location for providers in the token economy.