Liechtenstein bridges innovation and tradition in digitalization

In a recent interview by Unlock Blockchain in collaboration with ZexPR, Dr. Clara Guerra, Director of the Office for Financial Market Innovation and Digitalization for the Liechtenstein government, shed light on the principality’s pioneering role in blockchain innovation. Dr. Guerra’s remarks underscored Liechtenstein’s proactive approach to embrace emerging technologies while maintaining regulatory clarity and consumer protection.

Dr. Guerra likened Liechtenstein’s role to that of a cutting-edge R&D department operating on a State level. “I am in the business of bridging tradition with innovation. Liechtenstein has realized that we need actually our own department and our own people and competence center to deal with innovation and digitalization in relation to emerging tech for the financial market sector, but also for the broader economy and industry as a whole.”

A dedicated competence center is critical to navigate the rapidly evolving landscape of financial market innovation and digitalization. According to Dr. Guerra, Liechtenstein recognized the importance of not just reacting to technological advancements but actively shaping and implementing regulatory frameworks to foster innovation.

“I used to work in the hi-tech, private sector space. Really the important thing was to actually bring that innovation mindset and approach into a State framework and how we as a government approach innovation in this very fast moving sector with exponential growth and development,” said Dr. Guerra.

The pivotal moment for Liechtenstein came in 2016 and 2017 when the first wave of FinTech and blockchain companies approached its financial market authority for regulatory guidance. Comprehending both the challenges and potential inherent in these technologies, Liechtenstein embarked on crafting landmark legislation, culminating in the introduction of the Blockchain Act in 2020.

The Blockchain Act established a registration and supervision regime for crypto asset service providers, ensuring user protection and legal certainty for companies operating within the blockchain ecosystem. Dr. Guerra highlighted the success of this approach, noting Liechtenstein’s growing international recognition as a hub for blockchain innovation. “That has proven very successful and also placed us on the map and made us part of the international discussion.”

Liechtenstein’s regulatory approach to virtual assets has two main elements. Firstly, the registration and supervision of crypto asset service providers ensures compliance with minimum capital and operational requirements. Secondly, the introduction of civil law for tokens provides a legal framework for the transfer and legitimation of tokens within Liechtenstein’s civil law system.

Dr. Guerra stressed the importance of not only governing financial market instruments but also embracing the broader token economy. Liechtenstein’s civil law for tokens is designed to be principle-based, adaptable to various use cases, and future-proof against technological advancements.

Looking ahead, Guerra highlighted the forthcoming Markets in Crypto-Assets (MiCA) regulation proposed by the European Commission. As a proactive member of the European Economic Area (EEA), Liechtenstein will integrate MiCA provisions while further refining its own regulatory framework. Guerra emphasized Liechtenstein’s ongoing commitment to innovation, evident in the introduction of new service provider roles such as NFT custody and staking and blending service providers.

“This is all working actually in the broader context of the token economy. That was really important for us. We did not just want to attract or also govern and encompass the financial market and financial market, or financial instruments, but the entire token economy, so we devised civil law for tokens. It is formulated not according to a rule base, but a principal base. We defined a token as information on a blockchain system that can represent information or rights and also services. It is so open and neutral that it actually can be applicable to every different kind of use case,” concluded Dr. Guerra.

Liechtenstein is indeed emerging as a trailblazer in blockchain regulation and innovation. By combining regulatory clarity with a forward-thinking approach, it is rapidly fostering a safe, secure, and thriving environment for digital transactions and services in the emerging era of blockchain technology.

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Published On: May 23, 2024