Liechtenstein and Cryptocurrency
Liechtenstein Cryptocurrency Laws
Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology
Liechtenstein’s stable political climate, successful banking industry, and existence of one of the most advanced blockchain and crypto regulatory frameworks make Liechtenstein a haven for cryptocurrency platforms.[1] On January 1, 2020, Liechtenstein’s Blockchain Act, which established a comprehensive regulatory framework, came into effect.[2]The Act, formally named the Act on Tokens and Entities Providing Services Based on Trusted Technologies (TVTG), protects investors, combats money laundering, and establishes regulatory transparency.[3] The act regulates ‘Trustworthy Technology’ (TT), defined as technologies which the integrity, assignment of tokens to TT identifiers, and the disposal of tokens is ensured.[4] The act defines tokens as information on a TT system which represents rights assigned to one or more TT identifier.[5] The Act does not classify tokens, leaving the possibility of a token invoking financial market laws if the token constitutes a security or financial instrument.[6] For ICOs, token issuers headquartered or operating in Liechtenstein that issue tokens in their own name or in the name of a client in a non-professional capacity must register with Liechtenstein’s Financial Market Authority (FMA) if the provider issues more than 5 million CHF worth of tokens in a year.[7] TT Service Providers must register with FMA. TT Service Providers include token issuers and generators, key and token depositaries, TT Protectors, physical validators, exchange and identity service providers, verifying authorities, and price service providers.[8] With the implementation of TVTG, Liechtenstein became the first country to implement a comprehensive regulatory framework for the token economy, regulating civil law issues in client and asset protection, while providing a clear framework for digital securities that is intended to evolve with technological developments.[9]
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries:
Is cryptocurrency legal in Liechtenstein?
Do you have questions about cryptocurrency, digital currencies, or blockchain technology?
Freeman Law can help with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation, or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.
[1] Alexia Pollacco, An Introduction to Liechtenstein’s Cryptocurrency Regulation, BCAS.IO (Aug. 31, 2020).
[2] Joeri Cant, Liechtenstein’s Parliament Unanimously Approves New Blockchain Act, (Oct. 5, 2019) Cointelegraph.
[3] Id.
[4] Pollacco, supra note 5.
[5] Id.
[6]Id.
[7] Id.
[8] Id.
[9] Government Principality of Liechtenstein, Liechtenstein Parliament Approves Blockchain Act Unanimously, (Oct. 3, 2019).
