With the creation of the TVTG, the registration and ad-hoc supervision of ten new categories of service providers which provide their services on TT systems (e.g. blockchain) will be delegated to the FMA. The law also implements the FATF recommendations, which provide for supervision under the Due Diligence Act (DDA) for such services.
Reorting requirement for TT Service Providers
According to Article 28(1) TVTG, persons who, as of 1 January 2020, already provide a TT Service subject to registration under Article 12 TVTG but have not yet been registered by the FMA must report this to the FMA without delay.
The FMA provides answers to the most frequently asked questions
Pursuant to Article 12 TVTG, natural and legal persons who have a registered office or place of residence in Liechtenstein and who wish to provide one of the following services on a professional basis in Liechtenstein must register with the FMA:
- Token Issuers: Persons professionally offering tokens to the public in the name of third parties (Article 12(1) TVTG). This includes, for example, trading venues that carry out ICOs for their clients.
In addition, according to Article 12(2) TVTG, persons who publicly offer tokens in their own name (own issuance) or who publicly offer the tokens in the name of third parties, but do not do so on a professional basis, must also register if the value of the tokens issued during twelve months exceeds or will exceed CHF 5 million.
Both services must be applied for separately.
- Token Generators: Persons who create original tokens on behalf of third parties;
- TT Key Depositaries and TT Token Depositaries: Persons who safeguard tokens or private keys for third parties, e.g. in a safe or a collective wallet. This also includes the execution of transactions for third parties. These services are typically provided by crypto exchanges or wallet providers;
- TT Protectors: Persons who hold tokens on TT systems in their own name on account of third parties (note: a licence under the Professional Trustees Act is obligatory in this case);
- Physical Validators: Persons who ensure the enforcement of rights in accordance with the agreement, in terms of property law, to goods represented in tokens on TT systems.
- TT Exchange Service Providers: Persons who exchange legal tender for tokens and vice versa as well as tokens for tokens. Typically this includes ATMs at which cryptocurrencies can be exchanged, but also persons who offer exchanges against their own book exclusively online;
- TT Verifying Authorities: Persons who verify the legal capacity and the requirements for the disposal over a token. This includes, for example, services that ensure that only persons of legal age or those with a specific authorisation can purchase certain tokens;
- TT Price Service Providers: Persons who provide TT system users with aggregated price information on the basis of purchase and sale offers or completed transactions. This includes persons who publish independently calculated prices for tokens.
- TT Identity Service Providers: Persons who identify the person in possession of the right of disposal related to a token and who record it in a directory.
The registration obligation exists regardless of whether another licence has already been granted by the FMA. A bank licensed in Liechtenstein that safeguards tokens for clients must therefore additionally register as a TT Token Depositary as referred to in Article 2(1)(n) TVTG.
Registrations are possible starting 1 January 2020. The instructions listing the materials to be submitted and the application forms will be posted on the FMA website by that date at the latest.
According to Article 19(2) TVTG, the FMA must decide on the full application within three months. The duration of the registration process depends substantially on the quality of the materials submitted.
The FMA will publish an instruction specifying the information and materials to be submitted.
The costs for carrying out or rejecting a registration amount to CHF 1,500. If several services are to be registered, an amount of CHF 1,500 must be paid for the first service and CHF 700 for each additional service.
That is possible in principle. The costs increase accordingly by CHF 700 per additional registration.
The TVTG is not part of Liechtenstein financial market law. TT Service Providers are therefore in principle not considered financial intermediaries and are not subject to the European requirements governing licensing/registration and supervision, unlike a bank, for instance, even if they may perform similar activities.
The provisions of due diligence law (under the Due Diligence Act, DDA) are an exception, given that they apply equally to both traditional financial intermediaries and TT Service Providers subject to due diligence.
Consequently, this means that apart from supervision in the context of money laundering prevention under the DDA, the FMA does not carry out other ongoing supervision of TT Service Providers. Accordingly, TT Service Providers are not audited annually by a mandated auditor or the FMA. The FMA becomes active under supervision law only pursuant to (incident-specific) reporting provided for in the TVTG or on the basis of information provided by a third party.
As part of implementation of the FATF standard, all service providers who provide services for third parties in connection with tokens or virtual currencies (Article 3 DDA) are subject to money laundering supervision. These service providers are:
- Token Issuers, if they provide this service on a professional basis;
- Token Issuers not subject to the registration obligation that issue tokens in their own name or not on a professional basis, if an investor buys tokens in a total amount exceeding CHF 1,000 – irrespective of whether the purchase is made in one or several transactions;
- TT Key Depositaries;
- TT Token Depositaries;
- TT Protectors;
- Physical Validators;
- TT Exchange Service Providers.
Furthermore, the due diligence of traders in goods has been extended such that the trader is subject to the DDA also when accepting virtual currencies or tokens equivalent to CHF 10,000 as payment for goods.
Registration under the TVTG is effective exclusively in Liechtenstein; passporting according to the model of European financial market laws is therefore not possible.
If a service provider wishes to operate on a cross-border basis and, for example, advertise abroad or approach clients abroad, the service provider must therefore independently clarify in advance whether the service is subject to licensing in the chosen country.