On October 3, the Liechtenstein Parliament passed the Token and VT Service Provider Act (TVTG), previously known as “Blockchain Act”. The law will enter into force on Jan. 1, 2020.
Liechtenstein is known for its crypto-friendly regulation and therefore popular with many blockchain start-ups. With the new law, the country is the first one to have a comprehensive legal basis for the token economy. The TVTG creates legal security for all market participants, it regulates civil law issues in relation to client protection and asset protection, while establishing adequate supervision of the various service providers in the token economy.
“The TVTG implements an essential element of the government’s financial center strategy and positions Liechtenstein as an innovative and legally secure location for providers in the token economy,” said Prime Minister Adrian Hasler.
Liechtenstein’s TVTG is formulated to ensure that it remains applicable for subsequent technology generations. The law uses the term “transaction systems based on trustworthy technologies (TT systems)”and never talk about “blockchain”.
The law defines the minimum requirements for service providers on blockchain systems and requires them to be registered with the Liechtenstein Financial Market Authority (FMA). It also defines the term “token” and provides that transfer of a token on a TT system constitutes a binding transfer of the underlying right, whether that be a right to a physical object or a digital asset.
A great summary is provided by Thomas Nägele, attorney and co-author of the TVTG, and his law firm. Nägele’s colleague, CEO of Bitcoin Suisse in Liechtenstein, Mauro Casellini, outlined the importance of the Blockchain Act:
“The positive decision without dissent from the Liechtenstein government shows the importance of the “Blockchain Act”. The TVTG not only creates legal certainty for all market participants, but also heralds a new era, the token economy. With its pioneering role, Liechtenstein proves once again that it is the ideal location for FinTech and Blockchain companies and thus for us too, in the heart of Europe.”