The FMA has clarified that Smart Valor is not authorized to provide financial services subject to licensing in and from Liechtenstein. In recent weeks, the FMA has issued several such warnings. Liechtenstein may be blockchain-friendly, but it is certainly no crypto-wild west.
On the 12th of August, ICO.li reported that Zug-based Smart Valor launched a digital trading platform approved by regulators in Switzerland and Liechtenstein. According to the company’s website, it operates a „licensed exchange.” The Financial Market Authority Liechtenstein (FMA) has now clarified that this is not the case and Smart Valor does not have approval by the FMA to offer financial services.
Specifically, the FMA’s official announcement reads:
„The Financial Market Authority Liechtenstein (FMA) points out that Smart Valor AG, Vaduz, registration number FL-0002.596.088-9, has not been licensed by the FMA. Smart Valor AG is not authorized to provide financial services subject to licensing in and from Liechtenstein. Especially, Smart Valor AG is not a “Licensed Exchange,” as stated on the website https://smartvalor[dot]com/en/valor-platform.”
FMA has issued several warnings against unlicensed exchanges
Smart Valor is licensed in Switzerland and operates a subsidiary in Liechtenstein. It provides integrated custody, trading, and brokerage to investors worldwide. The initial offering included nine crypto-fiat trading pairs and the company said it would launch more cryptocurrencies as well as utility and security tokens at a later stage.
The platform wants to be a solution for traders who wish to operate in a regulated environment. A press release at Smart Valor’s launch claimed the Liechtenstein subsidiary had received approval by the FMA to operate a crypto exchange. Smart Valor has not yet reacted to the FMA’s statement.
The FMA’s notice follows several other similar warnings in the past weeks. Earlier this month, the FMA clarified that Neufund does not have any approval to provide financial services in Liechtenstein –contradicting what various media outlets have reported. The FMA has also announced the Liechtenstein Cryptoassets Exchange LCX has not been licensed by the FMA and has not submitted an authorization request to the FMA.
Liechtenstein is no crypto-wild west
Liechtenstein aspires to become the first jurisdiction that creates clear laws and regulations for a token economy. The goal is to enable legal certainty for businesses and investors, which is a pre-requisite to developing a functioning market.
The Blockchain Act will come into force in January 2020, introducing a comprehensive legal and regulatory framework for the industry. But having laws in place is only part of the puzzle; more important is that the responsible institutions actually enforce these laws.
The FMA is playing a key role in Liechtenstein’s financial ecosystem. It supervises all financial market participants, including crypto- and blockchain businesses. Therefore, the FMA has launched a fintech unit, which has a particular focus on the industry.
According to the FMA’s website, “Financial technologies are an opportunity for Liechtenstein. The FMA pursues the approach of using and designing regulation in such a way that established financial service providers and new enterprises can implement their business models.”
Liechtenstein may be fintech-friendly, but it is by no means a wild west for crypto-businesses, quite the opposite. It’s therefore paramount for any blockchain business moving to Liechtenstein to have not only the right licenses in place but also to carefully chose their wording when communicating in public or through marketing materials.
A warning by the FMA has first of all reputational consequences. Various members of Liechtenstein’s blockchain community have already expressed their disappointment regarding Smart Valor’s communication. However, in case of severe misconduct or misstatements, businesses can also face hefty fines or even the complete shut-down of their operations.
*Update to our original post from 11th October 2019:
In the meantime, Smart Valor has published a clarification on their website: https://news.smartvalor.com/regulatory-setup-of-smart-valor-in-liechtenstein/
According to the company:
• SMART VALOR AG (Liechtenstein) is operating a currency exchange for cryptocurrencies limited to payment and utility tokens. The current exchange falls into the category of currency exchange (Wechselstube) which does not need to be licensed by FMA but is subject to the Liechtenstein Due Diligence Act.
• SMART VALOR AG (Switzerland) is permitted to act as Financial Intermediary based on its membership with VQF, financial services standards association, a Swiss self-regulatory organization supervised by FINMA.
SMART VALOR updated its website immediately after the warning.