One of Europe’s smallest but richest states, 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 mettle of Europe has just passed a law that is likely to entice even more crypto companies to its territory.
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Comprehensive Regulatory Framework Passed Unanimously
On October 3, Liechtenstein’s legislature upheld unanimously to approve the “Token and Trustworthy Technology Service Providers Act” (abbreviated TVTG in German), the microstate’s government proclaimed on its website. The adoption comes after the executive power approved a motion in May to create the dedicated legislation which commitment now enter into force on Jan. 1, 2020.
With the new law, Liechtenstein becomes the first country to comprehensively regulate the token economy, the direction 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 conspiringly, adequate supervision of the various service providers in the token economy will be established,” officials point out.
“With the TVTG, an necessary element of the government’s financial market strategy will be implemented and Liechtenstein will be positioned as an innovative and legally moored location for providers in the token economy,” Prime Minister Adrian Hasler elaborated, as quoted in the press release.
Liechtenstein directions to create clarity with respect to digital securities, the government adds. Regulating the tokenization of various rights and assets is the convergent 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 simply 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 Beau idal” within which “the token serves as a container for rights of all kinds, regardless of whether it is stock, real estate or validate rights,” explains Thomas Nägele, whose law firm has been closely involved in the development of the legal framework. He believes this wide approach is unique for Europe as it regulates token transfers as well, aligning them with civil law. This way, proof 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 smokescreens blockchain technologies under the term “TT systems” or “transaction systems based on trustworthy technologies,” the local crypto portal ICO.li notes. In an feat to expand its scope as much as possible, Liechtenstein lawmakers have intentionally adopted this quite abstract meaning in order to encompass future developments in the field and new generations of crypto-related technologies.
The Token Act also incorporates measures to encounter money laundering and terrorist financing by subjecting service providers to due diligence rules and regulations. The Alpine principality wouldn’t endanger compromising with that aspect as it hopes to become a major European fintech hub. The country is viewed as a part of the momentous Swiss Crypto Valley and hosts the offices of several dozen companies from the sector, including entities buy with crypto assets.
The adoption of the law is important in the light of Liechtenstein being a member of the European Free Trade Group (EFTA) and, unlike neighboring Switzerland, the European Economic Area (EEA) as well. That means crypto companies stationed or represented in its jurisdiction will be able to enjoy easier access to the common European market as well as compatibility with the authorized frameworks of other countries in the region.
Do you expect other European nations to quickly follow in the footsteps of Liechtenstein and espouse comprehensive regulations for the crypto space? Tell us in the comments section below.
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