原文始发于微信公众号（瑞中法协）：Blockchain Regulation: The Liechtenstein TVTG
Although blockchain has existed for over a decade,many companies are only just beginning to understand this technology’spotential scope of application and added value. Apart from powering virtualcurrencies, blockchain facilitates a decentralised storing of data which canhelp to increase efficiency and transparency in many sectors. As with anyinnovative technology, it has been surrounded by an aura of uncertainty. This uncertaintycan be attributed to a lack of legal provisions regarding the use of itsapplications.
There currently is no comprehensive EU legal frameworkthat considers all potential blockchain applications. Attempts to regulateblockchain primarily include the fifth anti-money laundering directive (AMLD5).This, however, regulates only some of its applications, namely virtual assetproviders such as cryptocurrency exchanges and wallet providers, who offer softor hardware for storing cryptocurrency. Moreover, the Financial Action TaskForce (FATF), an intergovernmental regulatory body that establishes standards tocombat illicit financial transactions, has amended Recommendation 15 of its40+9 anti-money laundering and terrorist financing recommendations to includethe regulation of virtual asset providers.
Europeanand Chinese blockchain powerhouses
In recent years, China, Switzerland, and Liechtensteinall have evolved into financial technology (FinTech) and blockchain hotspots.They have seen numerous domestic start-ups in the sector emerge. Chineseinvestors looking for blockchain opportunities may be interested in bothSwitzerland and Liechtenstein because both jurisdictions are welcoming of the technologyand facilitate quick and easy company incorporation. It makes sense to analysethe Swiss and Liechtenstein legal frameworks that regulate the technology.
Moreover, Liechtenstein is the only jurisdiction that has implemented a comprehensive legal framework for existing and futureblockchain applications. The Tokens and TT Service Provider Act (TVTG inGerman) was implemented in October 2019 and took effect on 1 January 2020.
Liechtenstein’s TVTG is the world’s firstcomprehensive blockchain legislation. It challenges pre-existing notions ofblockchain by considering aspects of its application which have not receivedappropriate legal attention before. Most individuals seem to mainly associateblockchain with cryptocurrency, which is reflected in regulations around theworld. In particular, many legislators have regulated or even outright bannedcryptocurrencies such as Bitcoin without paying much attention to otherpotential applications of blockchain technology. In addition, data on Bitcoinuse in countries like China, which have banned the cryptocurrency, illustratethat banning blockchain applications might have little effect. Peers continueto trade in cryptocurrency regardless, partially due to the blockchain’sdecentralised design. It cannot be controlled by a central entity or government.Nodes are scattered all over the globe and the system follows only its ownrules, based on mathematical algorithms, and thus can hardly be manipulated.
The TVTG recognises this issue by regulating actorsand service providers in the realm of blockchain. The main advantage of theTVTG is that it is designed to maintain its validity far into the future. Inparticular, it uses the term “TT systems” which stands for “transaction systemsbased on trustworthy technologies”, rather than “blockchain”. With newtechnologies a central issue is that any attempt to regulate them quickly becomeoutdated as legislators fail to address technological advances in a timelymanner. This creates legal grey areas. Whenever a promising innovativetechnology is not regulated appropriately, it becomes difficult for companiesto benefit from its advantages. Any multinational corporation that intends toventure into blockchain technology will therefore likely consider Liechtensteinan attractive company location. Its law sets out clear rules and guidelines forusing blockchain.
Moreover, the TVTG discusses an abundance of potentialblockchain applications and answers corresponding legal questions. The Liechtensteingovernment introduced the term “token economy”, which designates all blockchain.The roles of different actors and service providers in the token economy aredefined. These include token generators, the TT key depositary, which stores accesskeys to tokens on behalf of their customers, the TT Verifying Authority, whichensures that during token transfers, legal regulations are observed and more.
In terms of due diligence obligations to combat organisedcrime, terrorist financing and money laundering, virtual currencies and paymenttokens have raised several questions, especially in the FinTech industry whichis pronounced in Liechtenstein. Generally, due diligence matters are regulatedin the Due Diligence Act (“SPG” in German). Since 1 September 2017, exchangeoffices that trade virtual currencies for cash have fallen within the area ofapplication of the SPG, if the exchanged sum exceeds 1,000 Francs.
In addition to the SPG, the TVTG defines several duediligence obligations that apply to actors in the token economy. Wherever anexisting right is translated into a token, the SPG applies. The Liechtensteingovernment deliberately proposed due diligence measures that go beyond thescope of European and international standards. Although the FATFRecommendations and AMLD5 do not require constant supervision, TVTG measuresinclude a registration system that mandates compliance monitoring with duediligence obligations and checks on market participants’ trustworthiness.
Comparisonto Swiss Legal Framework
Like Liechtenstein, Switzerland has a generallypositive attitude toward blockchain technology. The Swiss Financial MarketAuthority (FINMA) and the federal government both recognise the economic opportunitiesit presents. The canton of Zug is particularly welcoming of blockchain andcryptocurrency start-ups. A report covering the Swiss legal framework forblockchain and distributed ledger technology was issued by the Swiss FederalCouncil in December 2018. A draft law pertaining to distributed ledgertechnology and blockchain (DLT Draft Law) was published on 22 March 2019 by theSwiss Federal Council.
The DLT Draft Law references three types of tokens:payment tokens (“pure cryptocurrencies”, used as a means of payment ofmoney/value transfer), asset tokens (represening assets such as equity claimsor debt; analogous to derivates, equities and bonds), and utility tokens(intended to provide access to a service or application). FINMA introduced thesecategories within the scope of the guidelines for enquiries regarding theregulatory framework for initial coin offerings. Under Swiss law, cryptocurrenciesdo not qualify as legal tender and there is no state-backed Swisscryptocurrency. However, there are no specific cryptocurrency regulations andcryptocurrency-related activities are not prohibited. Only asset tokens aretreated as securities by FINMA and regulated as such. Tokens that qualify assecurities may trigger Swiss securities dealer licence requirements under theStock Exchange and Securities Trading Act. They could also be covered bytrading platform regulations under the Financial Markets Infrastructure Act andprospectus requirements. Several other regulations relating to cryptocurrencyasset taxation, promoting and blockchain technology testing have beenintroduced. As have ownership and licensing requirements, reporting requirementsand more. Yet, all these regulations and criteria focus mainly oncryptocurrencies, making them much less comprehensive than the TVTG.
Liechtenstein’s TVTG represents a disruptive event forthe blockchain and FinTech sectors and for legal experts in Liechtenstein andabroad. In particular, the TVTG challenges pre-existing notions of blockchainand distributed ledger application, which were previously largely assumed torelated solely to cryptocurrencies. Most legal frameworks, such as the AMLD5and the 40+9 FATF Recommendations, neglect the wide array of other blockchainapplications.
We can expect that Liechtenstein will continue toexpand its FinTech and blockchain sectors. This will attract an abundance of foreigncapital, especially from Chinese investors looking to expand into the Europeanmarket. The sound legal framework for utilising blockchain technology offers asignificant advantage in comparison to other jurisdictions, where companies mighthave to deal with legal grey areas and uncertainty. Multinational corporationscan profit fully from blockchain’s versatility only when there is aninternational standard in blockchain regulation. Especially during the Covid-19pandemic, which has many employees working remotely, using blockchaintechnology to record and share data could be immensely helpful for reducingchaos and delays. Not to mention that blockchain technology is highly secure andcost efficient. Therefore, the TVTG could serve as a blueprint or inspirationfor an international legal framework for blockchain regulation.
Dr.iur. Dr. rer. pol. Fabian Teichmann, LL.M. is an attorney-at-law andpublic notary in Switzerland. Marie-Christin Falker is a graduate researchassociate at Teichmann International (Schweiz) AG in Switzerland.