TT service providers
On 1 January 2020, the Token and TT Service Provider Act (TVTG) and the Token and TT Service Provider Ordinance (TVTV) entered into force. The TVTG entrusts the FMA with the registration and event-driven or ad hoc supervision of TT service providers. TT service providers are certain service providers who provide their services on TT systems such as a blockchain. The protection of persons using TT services (hereinafter referred to as "client protection") is a main objective of the TVTG.
Client protection is achieved in particular through a registration obligation, registration requirements that introduce a minimum standard for TT service providers in Liechtenstein, as well as reporting and publication obligations of TT service providers. Client protection is also accomplished through the FMA's cooperation with competent bodies such as the courts, the Office of the Public Prosecutor, and the Financial Intelligence Unit (FIU).
If a TT service provider's activities are also subject to special financial market laws, e.g. because it operates a banking business or payment service, it requires the appropriate licence issued by the FMA irrespective of its registration under the TVTG and is subject to official supervision under these special laws. Client protection is extended accordingly.
Registration obligation and designation protection
Persons with a registered office or residence in Liechtenstein who wish to provide TT services in Liechtenstein on a professional basis in principle require registration with the FMA. Registration in the TT Service Provider Register depends on minimum legal requirements (e.g. technical suitability, internal control mechanisms, minimum capital where applicable) which are important for client protection. TT service providers are not subject to the same regulatory requirements as traditional financial service providers, however. The assessment carried out for the registration of a TT service provider has both a more limited scope and a lesser depth than the licensing procedure under financial market law.
The FMA pursues all indications that suggest the unauthorised provision of TT services or use of protected designations. If there is reason to believe that a person is using TT services impermissibly, the FMA may demand information and documents from the person concerned, as if the person were subject to FMA supervision. If the suspicion is substantiated in the course of the preliminary clarifications, the FMA files criminal charges with the Liechtenstein Office of the Public Prosecutor.
The FMA may also inform the public that a certain person or company is not entitled to provide a TT service subject to registration.
Registration requirements / reporting obligations
After registration, the registration requirements must be fulfilled on an ongoing basis. In addition, there are legal requirements for carrying out business activities (e.g. safeguarding requirements and storage obligations) that concern client protection. However, TT service providers are not subject to ongoing prudential supervision like licensed financial intermediaries (e.g. periodic external audits, ongoing review of technical suitability), but rather to event-driven or ad hoc supervision. The level of protection ensured by supervision differs accordingly from that of a licensed financial intermediary.
The reporting obligations of the TT service providers (e.g. changes in relation to the registration requirements) therefore play an especially important role in client protection.
The active participation of the public should also be emphasised. The FMA accepts information relating to any TT service providers who violate the registration obligation or other deficits at any time.
If there are grounds for suspicion that the registration requirements are no longer met or that other deficits exist, the FMA takes the necessary measures to bring about a lawful state of affairs and to eliminate the deficits. The FMA may also carry out on-site inspections of TT service providers or temporarily prohibit the provision of a TT service. If the registration requirements are no longer met, this may also lead to withdrawal of the registration.
Publication obligations / basic information
Various publication obligations apply to TT service providers to strengthen client protection (e.g. basic information prior to issuing of tokens). For example, the public offering of tokens in principle requires the preparation and publication of basic information by the token issuer. There is no such obligation if an exception pursuant to Article 31 TVTG applies. The basic information must contain at least the minimum information required by law, such as in particular information on the tokens to be issued and the associated rights, a description of the conditions of acquisition and transfer of the tokens, and information on the associated risks.
The FMA does not verify the basic information. This means it does not check whether the basic information contains the minimum information required by law or is comprehensible. The FMA also does not check whether the token issuer is serious or the business model is viable. In principle, the persons indicated as responsible in the basic information are liable for the correctness of the details provided in the basic information.
Token issuers must also notify the FMA in advance of a token issue.
Statements by token issuers or publications that in particular give the impression that the FMA has approved or endorsed the basic information or examined the business model are in violation of the law. The FMA may publicly correct such published misinformation in a suitable manner, issue warning notices, and take further steps to protect clients.
Punishment of contraventions
The FMA punishes anyone with a fine of up to CHF 100 000 who for example, as a TT service provider:
- violates the minimum capital requirements;
- does not have sufficient internal control mechanisms;
- violates certain reporting obligations;
- violates the requirements and conditions associated with registration;
- violates certain safeguarding obligations;
- keeps insufficient records;
- violates certain publication obligations;
- violates obligations in connection with the preparation and publication of basic information.
Cooperation with competent bodies
The FMA works closely together with the competent authorities (Office of the Public Prosecutor, courts, other public authorities) in the interest of combating abuse. In principle, the FMA does not provide information on individual proceedings.
Client protection institutions
FMA: The FMA's competence extends to the points enumerated above. In particular, it is not competent for civil law disputes between TT service providers and their clients.
Liechtenstein Court of Justice: Punishment of misdemeanours (Article 47(1) TVTG)