The Liechtenstein Parliament recently unanimously passed the "Act on Tokens and Entities Providing Services Based on Trusted Technologies (TVTG)", or the Blockchain Act for short.
Leaving aside the missed opportunity for a Blockchain acronym, the Act intends to provide greater regulatory clarity for the blockchain industry, improve investor protection and improve anti-money laundering practices. Years in the making, the Blockchain Act will commence on 1 January 2020.
The primary application of the Act is to provide a mechanism for legal recognition of any right or asset being represented by a digital token. It does so through a Token Container Model (TCM), a framework for tokens to be "loaded" with any right representing a real world asset, such as shares or commodities, or other legal rights.
Speaking about the Blockchain Act, Prime Minister Adrian Hasler said:
Liechtenstein is positioned as an innovative and legally secure location for providers in the token economy
CEO of Bitcoin Suisse in Liechtenstein, Mauro Casellini, outlined the importance of the Blockchain Act, saying:
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.
With most international jurisdictions expressing reservations about introducing new legislation specifically targeted at blockchain and tokenisation, it will be interesting to see how this new law is received and its effects after commencement. We have seen Lichenstein coming up increasingly in client discussions when considering favourable jurisdictions, even before this Act was announced. Many countries considering how to regulate Blockchain technology will be watching closely.