In September 2020, the European Commission presented its draft regulation on the regulation of crypto assets, which aims to create a Europe-wide framework for the regulation of crypto assets of all kinds and associated services and issues. The draft pursues four general objectives:
- Creation of legal clarity and legal certainty to promote the secure development of crypto assets and the use of DLT in the financial services sector;
- Promote innovation and fair competition by creating favorable conditions for the issuance of crypto assets and the provision of related services;
- Ensuring a high level of consumer and investor protection and market integrity; and
- Containment of potential risks to financial stability and monetary policy.
The proposed regulation aims to remove EU-wide regulatory barriers to the issuance, trading and post-trading of tokenized financial instruments while maintaining the principle of technological neutrality and to expand the sources of financing for companies by increasing the issuance of new cryptocurrencies (ICOs) and tokenized financial instruments (STOs).
It also aims to reduce the risk of fraud and illegal practices in the token markets and open up new investment opportunities and new types of payment instruments for consumers and investors.
The future regulation is intended to ensure uniform rules for all member states and covered participants, which the Commission believes is long overdue given the already broad acceptance of crypto assets. It is not expected to come into force until the end of 2022 at the earliest. Moreover, a large part of the provisions will only come into force after a transitional period of 18 months.
The planned EU regulation is also of key relevance to Liechtenstein in several respects. This is because the Regulation is a legal act relevant to the EEA internal market, which will therefore also apply in the EEA.
The Principality of Liechtenstein was one of the first countries in the world to introduce comprehensive regulation of the blockchain sector with the Blockchain Act (TVTG), which came into force on January 1, 2020. The TVTG not only makes the provision of certain services in the area of blockchain subject to authorization and stipulates information obligations for public offers. In particular, the TVTG was the first country in the world to recognize the token as a legal institution with the Token Container Model (TCM) and to classify tokens differently based on the rights they hold. (Utility Token, Security Token, Payment Token). Liechtenstein has therefore been acting as a model for the regulation of the blockchain sector for almost two years.
A look at the provisions applicable in Liechtenstein also shows that the TVTG also served as a model for the planned regulation at European level. In particular, the MiCAR draft adopts the token container model of the TVTG, the authorization requirement for the provision of certain blockchain services and also the information requirements for public offers.
Accordingly, there will only be minor changes for Liechtenstein after MiCAR comes into force and both existing and future projects in Liechtenstein will be able to benefit from the many years of experience and practice of service providers and authorities in the area of cryptoasset regulation.
11|2021