Financial innovation has been a key focus area of Liechtenstein’s government since 2013. Launched in April 2019, the Unit for Financial Center Innovation has been a driver behind many of the recent blockchain developments.
Liechtenstein’s government is making a significant effort to foster financial innovation in the country, in particular Fintech innovation. Prime Minister Adrian Hasler said, “The appeal of Liechtenstein as a financial center will in future hinge upon governmental framework conditions, short pathways and competencies of the authorities to a much greater extent.”
Unit for Financial Center Innovation to facilitate Fintech development
In 2013, Liechtenstein’s Ministry of Finance has declared Fintech as a key focus area and developed a framework to support the industry. All financial innovation initiatives were bundled together under the program “Impuls Liechtenstein.”
To facilitate the development, the government launched the Unit for Financial Center Innovation (“FSI”- Stabsstelle für Finanzplatzinnovation) in April 2019. Thomas Dünser has been named the Managing Director of the unit.
The FSI plays a key role in Liechtenstein’s strategic plan as it coordinates the efforts of different governmental departments and the private economy. According to a press release of the government, its creation was a “milestone” for Liechtenstein and “increased the visibility within Liechtenstein’s borders and beyond.”
Blockchain as a driver of financial innovation
Blockchain technology plays a crucial role in Liechtenstein’s fintech strategy and is a significant focus of the FSI. Managing Director Thomas Dünser was actively involved in the creation of the Blockchain Act and believes the technology will change the world in many different ways. He says, “I’m fascinated by blockchain technology because it allows us to digitalize economic activities with high legal security, enabling us to think in entirely new ways.”
However, he also admits businesses struggle to launch new applications because the regulatory frameworks are not clear or don’t fit digital technologies. “If laws are roadblocks to innovation, we as government representatives have to act and create technology-neutral and innovation-friendly regulations,” Dünser said in an interview.
He explains that blockchain goes way beyond cryptocurrencies or digitized assets. It solves one of the main challenges of digitalization, as it prevents malicious actors from copying digital information. As a result, businesses in all kinds of sectors of the economy and society can use digital technologies. “If you ask me, we are only at the beginning of a long-term development,” says Dünser. “We cannot go back to a time when there was no blockchain.”
Liechtenstein’s financial market laws will need amendments
Although the Blockchain Act has created the legal basis for a token economy and regulates many of its basic activities, financial market laws will need further amendments, too. Dünser explains some of the current financial market laws are not suiting digital technologies.
Furthermore, there is a need for changes on the European level, he says. Nevertheless, Dünser believes Liechtenstein is on the right track. He and his department will continue to solve “as many of the challenges here in Liechtenstein as possible so that we can constructively drive new developments.”
On this note, the Financial Market Authority Liechtenstein (FMA) recently launched a survey asking fintech companies for their advice and opinions. The goal is to investigate the current fintech activities in the country, the market’s potential, and challenges. You can find the survey here and participate.