The Law on Tokens and Trustworthy Technology Service Providers (TVTG or “Blockchain Act”) entered into force on 1 January 2020. The TVTG entrusts the FMA with the registration, event-driven supervision, and regular due diligence supervision of certain service providers which provide their services on trusted technology (TT) systems such as a blockchain.
These TT service providers often operate in close proximity to financial market law and provide services similar to traditional financial intermediaries. For instance, a TT token depositary may, similar to a bank, provide its clients with a cryptocurrency account through which they can carry out transactions. The cryptocurrencies are then taken into safekeeping by the TT service provider. Trading venues may also be set up on which cryptocurrencies can be traded in a manner similar to securities.
If the business model of a TT service provider includes services that are subject to special financial market legislation, e.g. because the service provider is operating a banking business or offering payment services, the TT service provider also needs to have the appropriate licence issued by the FMA under these special laws, irrespective of its registration under the TVTG.
The registration obligation under the TVTG is intended to introduce minimum requirements for all TT service providers in Liechtenstein which are important from the perspective of client protection, compliance with international standards, and protection of the country's reputation.
In this regard, TT service providers are not subject to the same regulatory requirements as a traditional financial service provider. 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. Moreover, TT service providers are not subject to ongoing prudential supervision in the same way as licensed financial intermediaries (e.g. transparency obligations, comprehensive reporting obligations, or periodic external audits), but rather to event-driven supervision. The level of client protection ensured by supervision thus differs from that of a licensed financial intermediary.
Accordingly, registration under the TVTG is not to be equated with a licence under financial market legislation.
However, TT service providers subject to due diligence are subject to regular supervision to combat money laundering, organised crime, and terrorist financing (supervision under the Due Diligence Law, SPG). The same supervision standard applies here as for licensed financial service providers.
For further information on the TVTG, please refer to the section on FinTech and TVTG.