Regulatory requirements for ICOs and STOs in Liechtenstein differ depending on the type of token issued. The current laws distinguish security tokens, utility tokens, and payment tokens.

Lichtenstein is not a member state of the European Union (EU), but a member of the European Economic Area (EEA). Not every EU law is binding for EEA countries, but many are. Thus, businesses looking at incorporating in Liechtenstein do have to pay attention to both, national and EEA-wide regulations.

Directives specify their EEA-relevance

An EU-Directive that binds EEA member states will be marked as “EEA-relevant.” There will be a note in the header, right below the title, that says in brackets “(Text with EEA relevance.)”

Technically, that only means the text is proposed to be relevant for all EEA countries. Strictly speaking, the Directive needs to be formally incorporated into the EEA Agreement, before it becomes binding for all member states. In practice, however, it is usually safe to assume that texts marked as EEA-relevant will be promptly incorporated into the EEA Agreement.

Many of the EU’s financial market regulations, such as the Markets in Financial Instruments Directive II (MiFID II), are EEA-relevant and also apply to Liechtenstein-based businesses. Likewise, licensing requirements are partly harmonized across the EEA.

Three token categories: security tokens utility tokens, and payment tokens

Jurisdictions worldwide apply different approaches to categorize tokens. Liechtenstein’s Financial Market Authority (FMA) currently distinguishes between security tokens, utility tokens, and payment tokens.

Roughly speaking, security tokens qualify as a financial investment vehicle under MiFID II. Utility tokens don’t qualify as financial investments and are mostly unregulated. Payment tokens serve as a means of payment.

Thus, from a legal perspective, security and payment tokens are particularly relevant.

Issuing utility and security tokens does usually not require any licenses

If a company plans to issue tokens, it is the company’s responsibility to clarify whether the issuance is an unregulated ICO (utility tokens) or whether it’s an STO (security tokens) and financial market laws apply.

If a company issues a security token with the goal of raising debt or equity, it does not need any specific licenses. However, in this case, national and European prospectus regulations may apply. Read more about Liechtenstein’s prospectus regulations here.

If a company issues a utility token, the ICO is currently unregulated, meaning issuers don’t need any specific licenses either. The regulations, however, may change with the upcoming Blockchain Act, which imposes rules on ICOs, leading to better investor protection.

Tokens can come in many different forms, and an issuer should always clarify the exact legal requirements of its token. In some cases, issuers may still need specific licenses due to the nature of their tokens.

The FMA established a FinTech team in June 2018 that offers advice and guidance. But it’s advisable to consult a specialized law firm to clarify the token’s legal status.

Firms issuing payment tokens need an e-money or banking license

Payment tokens are a different story. Companies can only issue those if they have an e-money license or a banking license.

An e-money license, as outlined in the EEA-relevant DIRECTIVE 2009/110/EC, allows businesses to issue and transfer electronic money. It is also possible to passport an e-money license to any other EEA country. Hence, a Liechtenstein-based business with an e-money license can offer services in other EEA countries without additional approval requirements.

Issuing payment tokens does not require a full banking license. However, if a business plans to offer banking services, like taking client deposits or issuing loans, a full banking license will be required.

To sum it up: Businesses that want to issue tokens in Liechtenstein need to study both national as well as EEA law. The work will be worth it though, as a properly licensed Liechtenstein-based business will have access to the entire EEA-market.

Disclaimer: The content on this website is provided for general information purposes only and does not constitute legal advice.


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