Blockchain network foundations in Liechtenstein

Liechtenstein foundation law has existed since the enactment of the Persons and Companies Act in 1926. Since then, the Liechtenstein foundation has proven to be a reliable and sought-after legal form, particularly for estate planning, asset protection and also as a top holding structure for privately held group structures.

It is common knowledge that some of the largest private corporate groups in the world are ultimately held by Liechtenstein foundation structures that act as an umbrella for the corporate group, such as the Ikea Group, the Tetra Group, the Onassis Group, the Hilti Group and the Luksic Group.

In addition to the aforementioned purposes, the Liechtenstein Foundation has also been used for decades to pursue charitable causes around the world. In contrast to the Swiss charitable foundation, which is subject by law to strict restrictions with regard to the charitable purposes that can be pursued, including in particular the restriction to charitable activities in Switzerland, the Liechtenstein charitable foundation is not subject to any such restrictions. Rather, Liechtenstein foundation law permits and welcomes the pursuit of charitable foundation purposes anywhere in the world and therefore has a much broader conceptual scope of application.

Our practice has shown that the Liechtenstein foundation has gained considerably in importance over the last two years, particularly in the advanced area of blockchain networks. Due in particular to the flexibility of Liechtenstein foundation law, the Liechtenstein non-profit foundation has proven to be the ideal legal form for the long-term fulfillment of the purpose and objectives of decentralized network protocols, which are in the process of providing the technical infrastructure of the future. In the meantime, Liechtenstein charitable foundations have proven to be a reliable cornerstone for several of the world’s top 100 network protocols. In addition to SKALE Network (SKL) and Elrond Network (EGLD), for which a network foundation has already been established, Doge Network (DOGE) has also recently started to set up a Liechtenstein foundation structure.

The steadily growing importance and proof of functionality and reliability have not gone unnoticed. Our law firm is experiencing increasing demand for the establishment of new Liechtenstein foundation structures in order to provide a suitable legal basis for decentralized network protocols.

Recently, we have also seen an increased demand for the relocation of network protocol foundations from other jurisdictions. Network protocol foundations based in Switzerland in particular are finding that the strict legal framework, purpose limitation in conjunction with disproportionate and sometimes invasive foundation supervision and disadvantageous tax treatment are increasingly placing a burden on existing network protocol foundations, which even have the potential to jeopardize the long-term pursuit of the original objectives and intentions of the founders of the protocols.

In cooperation with experienced international tax advisors, our law firm has already advised and supported several projects in the establishment of Liechtenstein network protocol foundations as well as in the transfer of existing structures to the Liechtenstein legal system. Based on the experience gained in recent years and the obstacles encountered abroad, we can confidently state that Liechtenstein currently offers a unique and unmatched legal environment for decentralized blockchain protocols and networks, which provides a sustainable foundation for the long-term development and growth of decentralized networks.

Therefore, not only new but also existing blockchain protocols are well advised to consider and examine the implementation of a Liechtenstein foundation structure at an early stage of the project.

9 | 2021