The recent turmoil surrounding FTX and Alameda has once again drawn public attention to the crypto industry and, in particular, provided new fertile ground for criticism of the industry as a whole. Some members of the committee of inquiry appointed in the FTX case even called for a ban on cryptocurrencies.
Such demands are obviously unreasonable and disproportionate and fail to recognize the true causes of these events. Accordingly, major financial market players such as Blackrock, Fidelity and JP Morgan Chase in particular remain convinced that the next generation of financial markets will be based on tokenized assets.
Nevertheless, the drastic events surrounding FTX once again demonstrate how important appropriate regulation is for a sustainable future of the cryptoasset markets, ensuring that the future of a crypto service provider and its clients is not dependent on the actions of individual inexperienced individuals, but that an adequate governance structure and risk management is implemented and that the persons in charge have sufficient experience in the areas in which they operate.
For precisely these reasons, Liechtenstein was the first country in the world to enact the Liechtenstein Blockchain Act (TVTG) in January 2020, which requires suitable governance and risk management structures for the provision of services in the crypto sector.
The TVTG also served as a model for the MiCA Regulation, which will provide uniform regulation in the EU/EEA and, like the TVTG, is intended to ensure that the European market is spared incidents such as FTX.
MiCAR is expected to come into force during the second quarter of 2023 and then apply in mid or late 2024 after a transition period of 12 to 18 months. As a member state of the EEA, the provisions of MiCAR will also be applicable in Liechtenstein and will then replace the provisions of the TVTG.
During this transitional period, the provisions of the TVTG will also be gradually adapted to ensure that the companies subject to the TVTG can transition to the new regime under MiCAR as seamlessly as possible.
Accordingly, all companies that have already registered under the provisions of the TVTG before the end of the transition period will have the opportunity to obtain a license under MiCAR in a simplified and accelerated procedure and benefit from EU-wide passporting.
Another component of the digital finance strategy is the DLT pilot regime, which we have already reported on separately: https://niedermueller.law/de/dlt-pilot-regime-in-liechtenstein/
In the coming months, we will present the future regulation under MICAR and compare it with the existing regulation under the TVTG in a series of newsletters. In particular, the scope of application and the individual Crypto Asset Service Providers (CASP) under MiCAR are presented.
Furthermore, based on our experience in recent years, we will cover some essential topics in further newsletters that blockchain companies in Liechtenstein should be aware of. In particular, the corporate governance structure, the regulatory framework, the KYC/AML regulations, the protection of IP rights from a practical perspective and the current best practice are explained.
Our newsletters are intended to make it easier for existing and future market participants in particular to adapt to the upcoming regulation and also to enter the market and to raise awareness of important problem areas that are all too often neglected. In this way, we also want to ensure that the quality of the players in the Liechtenstein market continues to improve and that Liechtenstein can continue to live up to its role as a role model.