A delegation of high ranking FMA officials went to Berlin last week to meet with German lawmakers and officials. Part of the agenda were regulatory questions and digitalization. More international regulatory cooperation will be crucial for Liechtenstein’s attractiveness as a location for blockchain and crypto businesses.
Joschka Fischer nailed it when he spoke at the Liechtenstein Finance Forum earlier this month: “The future of finance will heavily depend on international cooperation. As the financial industry gets more digital and more global, operations like payments or investments will increasingly happen on a global scale rather than on a national or local level. That requires an international framework, technologically as well as legally.”
With that in mind, a delegation of Liechtenstein officials traveled to Berlin last week to meet up with representatives from politics, administration and business. The goal of this meeting was to exchange ideas regarding digitalization, the COVID crisis and the financial center in Liechtenstein.
The FMA seeks international dialogue
Part of the delegation were Liechtenstein’s ambassador Isabel Frommelt-Gottschald, Roland Müller, president of the supervisory board of the Financial Markets Authority Liechtenstein (FMA) and Mario Gassner, Chairman of the Board at the FMA. They met members of the German parliament and representatives of administrative authorities and businesses.
According to the FMA’s official press release, the discussions aimed at “sharing knowledge regarding the financial center Liechtenstein” and to “strengthen the trust in Liechtenstein and Liechtenstein’s financial intermediaries.” The FMA also highlights the importance of the German market for Liechtenstein’s financial industry.
Furthermore, „tackling the economic consequences of the Corona-crisis” and “digitalization of the financial sector,” “regulatory concerns” and “anti-money-laundering” were addressed during the meeting. In particular, those four points caught our attention.
Liechtenstein needs easy access to the EEA
It’s not a secret that a huge part of Liechtenstein’s success as a hub for blockchain and cryptocurrency businesses is a result of favorable regulations. The Blockchain Act, which was introduced earlier this year, created a favorable regulatory environment that attracted international blockchain businesses.
Many of those businesses moved to Liechtenstein to find a place to launch their products and services and then expand to Europe in a subsequent step. As Liechtenstein is a member of the European Economic Area (EEA), in theory, financial products and services approved by the FMA Liechtenstein can be passported to other EEA members without much effort.
Attracted by this idea, businesses with innovative ideas came to Liechtenstein, got their securities prospectuses approved here, and then passported it to countries like Germany to sell security tokens.
Long story short: That has turned out to be much less feasible than many companies initially thought. Products and services approved in Liechtenstein are still subject to the regulatory approval of regulators in other EEA-countries. And they often take a much heavier stance on blockchain and cryptocurrencies than the FMA does, meaning, Liechtenstein-based businesses might not even be allowed to market their services in the EEA.
That’s why it’s crucial that the FMA is engaging in a dialogue with regulators from neighboring countries, in particular, Germany. If passporting to the EEA doesn’t work, then the main reason for blockchain- or crypto-finance businesses to move to Liechtenstein is gone.