Small in size but big on innovation, Liechtenstein is marking its territory in the blockchain and crypto sphere.
An article by Cointelegraph published earlier today reports that Liechtenstein, which is snuggled between Switzerland and Austria, has grabbed the attention of the international and European crypto communities since the industry’s early days.
The Cointelegraph report points out that Liechtenstein was one of the first countries to introduce specific legislation on crypto and blockchain, known as the Token and Trusted Technology Service Providers Act (TVTG) or the Liechtenstein Blockchain Act. This law, which became effective on 1 January 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 upsurge in the number of crypto service providers since the Act’s inception, attracted by the 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, offering a clear roadmap for categorizing and handling tokens based on their function, whether utility, security, or payment tokens. This law clarified fundamental legal issues and set the groundwork for traditional financial institutions to utilize tokens.
It went on to say that with trends such as nonfungible tokens (NFTs) and decentralization becoming more prevalent, the Blockchain Act remains incredibly relevant. Dr. Thomas Dünser, Director of Liechtenstein’s Office for Financial Market Innovation and Digitization, maintains that the Act is “open for innovation” and flexible, making it capable of accommodating 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 Union Commission, like Liechtenstein, views the token economy as an important opportunity for Europe.
When asked about the potential for tighter regulations following the collapse of major crypto businesses, Dünser stated that overregulation should be avoided, but certain adjustments are necessary. Cointelegraph notes that Dünser highlighted the urgent need to close regulatory gaps, especially those related to staking or borrowing and lending of customer tokens by crypto exchanges.