On October 3, 3019, the Liechtenstein Parliament unanimously approved the Token and TT Service Provider Act (the Act). The Act, sometimes referred to as “TVTG” based on its German acronym, provides a comprehensive framework regulating the issuance, storage and conveyance of blockchain tokens in Liechtenstein. According to Liechtenstein’s embassy in Washington, Parliament’s approval began a 30-day public comment period that runs through November 8, 2019. If there is no adverse public comment by the citizens of Liechtenstein, the embassy anticipates that the Act will take effect soon thereafter.
The vertrauenswürdige Technologien, trustworthy technology, is a central premise of the Act. The Act defines “trustworthy technology” (TT) as any technology through which the integrity of “Tokens,” the clear assignment of tokens to “TT Identifiers” and the disposal of Tokens is ensured. “Token” is defined as a piece of information on a TT System that can represent claims or rights of memberships against a person, rights to property, or other absolute or relative rights, and is assigned to one or more TT Identifiers. A “TT Identifier” is an identifier that allows the clear assignment of Tokens derived from a public key, and a “TT System” is any transaction system that allows for the secure transfer and storage of Tokens and the rendering of services based on trustworthy technology. The TT concept clearly includes a blockchain or distributed ledger.
The Act legally recognizes the status of Tokens and provides for their transfer, disposal and cancellation. The Act also establishes a regime for regulating Token issuers, depositaries, exchanges and other intermediaries, which are collectively referred to under the Act as “TT Service Providers.” TT Service Providers domiciled in Liechtenstein are subject to robust regulation by the Financial Markets Authority regarding registration, operation and supervision, including in some instances the requirement to maintain minimum regulatory capital of 50,000 to 250,000 Swiss Francs (equivalent to approximately USD 50,000 to USD 250,000) depending on the proposed business. Interestingly, TT Service Providers domiciled outside Liechtenstein who provide TT services to Liechtenstein residents do not appear to be subject to the Act.
To observers in the United States, where the issuance and transfer of tokens is subject to regulation by numerous different regulatory authorities with sometimes conflicting objectives, the Act provides an interesting point of comparison. While such a one-stop-shop for token regulation in the US is politically unlikely, it nonetheless serves as an example of how other forward-thinking governments are attempting to encourage the development of a local token economy.
An informative white paper by the government of Liechtenstein and an unofficial English translation of the Act is available here.