Blockchain technology is a key pillar of Liechtenstein’s Financial Center Strategy. The government will create more legislation to further develop a “Digital Financial Center.”
The Liechtenstein government has announced a “Financial Center Strategy” to further strengthen the attractiveness of Liechtenstein as an international finance hub. Technological and regulatory changes form a key part of the strategy.
“Liechtenstein today offers an innovative and diversified financial services sector with a strong international network. We intend to further strengthen that sector and its advantages,” says Prime Minister Adrian Hasler.
Commitment to European regulatory standards
The goal of Liechtenstein’s Financial Center Strategy is to “promote the location advantages of our financial center,” says Hasler. “These include political and economic stability, a liberal legal order in line with European and international standards, integration into two economic areas, the efficiency of the public authorities and – above all – openness to innovation.”
Liechtenstein is not an EU-member but a member of the European Economic Area (EEA). Hence, Liechtenstein automatically adopts various European legislation that all EEA member-states are required to translate into national laws. That includes, for example, the Markets in Financial Instruments Directive, which harmonizes securities trading across the EEA.
Besides the EEA, the relationship to neighboring Switzerland is key to Liechtenstein’s economic success. Switzerland, however, is not an EEA member and doesn’t have to comply with EEA regulations. Adrian Hasler points out that it’s a challenge for Liechtenstein to be in between Swiss and EEA regulations. But he also made a clear commitment to consistently high level of compliance with European standards, as this is of “crucial importance to the implementation of Liechtenstein’s Financial Center Strategy.”
Besides regulatory compliance, the Financial Center Strategy mentions expanding Liechtenstein’s network of double taxation and free trade agreements, creating fast decision-making and communication paths, and enhancing the competence of the public authorities as key pillars of the strategy.
Creating a Digital Financial Center
The strategic document published by the government explicitly mentions the creation of a “Digital Financial Center,” with Digital Ledger Technology (DLT) as a key driver of innovation. The document also states that a secure digital representation of assets on DLT-systems will be key to develop a digitalized financial marketplace.
To drive the further development of the Digital Financial Center, the paper mentions three concrete steps: the creation of fully digitalized “eGovernment” procedures, the introduction of a digital passport for financial services businesses to simplify digital business processes, and the further development of legislation to create legal certainty for Liechtenstein’s token economy.
Blockchain Act key pillar of Financial Center Strategy
The Prime Minister also mentioned the Blockchain Act as a key part of the strategy. Just recently, the proposed legislation has received criticism from within the government. Daniel Risch, Minster of the Economy, said he doesn’t entirely agree with the government’s crypto-euphoria. Prince Hans-Adam II called the Blockchain Act a „marketing stunt.”
Initially, the government wanted to introduce the law in early 2019, but the timeline was optimistic. “We received positive and extensive feedback regarding the Blockchain Act. There also have been some questions, which we want to answer in a comprehensive manner,” says Thomas Dünser from the Ministry of Finance. He adds that the topic is rather complex, thus, it is important to consider all aspects to present balanced and understandable legislation.
While some critics say the government is too slow and will take at least until 2020 to introduce the law, Dünser remains optimistic. “We are confident that we can transmit the proposal to the Parliament before the summer vacation,” he says. If so, the Blockchain Act could be translated into law in the second half of 2019.