One of Europe’s smallest but richest nations, Liechtenstein, has made a significant step towards clarifying the regulatory environment in its already crypto-friendly jurisdiction. The parliament of the German-speaking principality in the heart of Europe has just passed a law that is likely to entice even more crypto companies to its territory.
Comprehensive Regulatory Framework Passed Unanimously
On October 3, Liechtenstein’s legislature voted unanimously to approve the “Token and Trustworthy Technology Service Providers Act” (abbreviated TVTG in German), the microstate’s government announced on its website. The adoption comes after the executive power approved a motion in May to create the dedicated legislation which will now enter into force on Jan. 1, 2020.
With the new law, Liechtenstein becomes the first country to comprehensively regulate the token economy, the government notes in its announcement. “On the one hand, the law regulates civil law issues in relation to client protection and asset protection. On the other hand, adequate supervision of the various service providers in the token economy will be established,” officials point out.
“With the TVTG, an essential element of the government’s financial market strategy will be implemented and Liechtenstein will be positioned as an innovative and legally secure location for providers in the token economy,” Prime Minister Adrian Hasler elaborated, as quoted in the press release.
Liechtenstein aims to create clarity with respect to digital securities, the government adds. Regulating the tokenization of various rights and assets is the focal point of the legal document. As the CEO of Bitcoin Suisse (Liechtenstein) Mauro Casellini put it, speaking to the German outlet BTC Echo, “The TVTG not only creates legal certainty for all market participants, but also heralds a new era, the token economy.”
The core concept of the law is the so-called “Token Container Model” within which “the token serves as a container for rights of all kinds, regardless of whether it is stock, real estate or license rights,” explains Thomas Nägele, whose law firm has been closely involved in the development of the legal framework. He believes this comprehensive approach is unique for Europe as it regulates token transfers as well, aligning them with civil law. This way, token transactions are fully defined in legal terms.
‘Blockchain Law’ to Encompass Future Technologies
The TVTG bill is also commonly referred to as the “Blockchain Act.” It covers blockchain technologies under the term “TT systems” or “transaction systems based on trustworthy technologies,” the local crypto portal ICO.li notes. In an effort to expand its scope as much as possible, Liechtenstein lawmakers have intentionally adopted this quite abstract definition in order to encompass future developments in the field and new generations of crypto-related technologies.
The Token Act also incorporates measures to combat money laundering and terrorist financing by subjecting service providers to due diligence rules and regulations. The Alpine principality wouldn’t risk compromising with that aspect as it hopes to become a major European fintech hub. The country is viewed as a part of the greater Swiss Crypto Valley and hosts the offices of several dozen companies from the sector, including entities dealing with crypto assets.
The adoption of the law is important in the light of Liechtenstein being a member of the European Free Trade Association (EFTA) and, unlike neighboring Switzerland, the European Economic Area (EEA) as well. That means crypto companies based or represented in its jurisdiction will be able to enjoy easier access to the common European market as well as compatibility with the legal frameworks of other countries in the region.
Do you expect other European nations to quickly follow in the footsteps of Liechtenstein and adopt comprehensive regulations for the crypto space? Tell us in the comments section below.
Images courtesy of Shutterstock.
Do you need a reliable bitcoin mobile wallet to send, receive, and store your coins? Download one for free from us and then head to our Purchase Bitcoin page where you can quickly buy bitcoin with a credit card.
Purchase Bitcoin without visiting a cryptocurrency exchange. Buy BTC and BCH here.