A Comprehensive Look at the Blockchain Act – CryptoMode

by Arthur · May 1, 2023

The blockchain and cryptocurrency industry has expanded rapidly worldwide, and the Principality of Liechtenstein has emerged as a significant player on the European landscape. As the sixth smallest country in the world, Liechtenstein has gained international attention for its proactive approach to crypto and blockchain regulations. CryptoMode delves into Liechtenstein’s groundbreaking Token and Trusted Technology Service Providers Act (TVTG) and examines its compatibility with the upcoming Markets in Crypto-Assets (MiCA) regulation.

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Liechtenstein Blockchain Law

In 2019, Liechtenstein marked itself as one of the first countries globally to implement specific crypto and blockchain legislation, the Token and Trusted Technology Service Providers Act (TVTG), also known as the Liechtenstein Blockchain Act. This ground-breaking legislation has been in force since 2020, creating one of the world’s first regulated environments for token-related services.

Since the implementation of the TVTG, Liechtenstein has witnessed a steady increase in the number of crypto service providers establishing operations within its borders.

TVTG’s regulatory security and direct communication channels with the local Financial Market Authority (FMA) have contributed to the country’s crypto-friendly atmosphere.

Token Container Model: Liechtenstein’s innovative approach to Token Regulation

Liechtenstein’s TVTG was the first legislation globally to introduce the Token Container Model (TCM), providing a legal framework for tokens based on their functionality. This pioneering approach made it possible to classify tokens into utility tokens, security tokens or payment tokens. This distinction clarified that not all tokens are financial instruments, which provides greater legal certainty and receives positive feedback from the crypto industry.

When Liechtenstein’s Blockchain Act was drafted in 2016 and passed in 2019, decentralized finance applications (DeFi) and non-fungible tokens (NFT) had not yet gained the prominence they enjoy today. TVTG’s flexible, “principle and role-based” approach allows for adaptation to innovations and technological developments in the crypto and blockchain space, emphasizing a “technology-neutral” stance.

Compatibility with the upcoming MiCA regulation

With the introduction of the Markets in Crypto-Assets (MiCA) regulation, questions have arisen regarding its compatibility with Liechtenstein’s existing Blockchain Act.

As both legal frameworks aim to provide a regulated environment for crypto-assets and services, it is crucial to assess their alignment and potential impact on Liechtenstein’s crypto industry.

Liechtenstein’s groundbreaking Blockchain Act and its compatibility with the upcoming MiCA regulation will be instrumental in shaping the country’s future as a key player in the crypto and blockchain sector.

By maintaining its flexible and technology-neutral approach to regulation, Liechtenstein is well positioned to adapt to new trends and maintain its status as an attractive destination for crypto service providers.

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