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An already established crypto framework and unique access to the EU and Swiss markets puts the European Economic Area (EEA) member in prime position to attract crypto firms seeking to set up shop under the EU’s legal regime.
Liechtenstein is a non-EU member that follows single market rules via the EEA, which means that the EU’s Markets in Crypto-Assets (MiCA) regulation and other regulations such as the Digital Operational Resilience Act (DORA) will be applicable within the microstate.
MiCA will be applicable in Liechtenstein as soon as the corresponding decision of the EEA Joint Committee to incorporate the regulation into the EEA Agreement comes into force.
The implementation into Liechtenstein law will be carried out by the Act Implementing Regulation (EU) 2023/1114 on Markets for Crypto Assets (EEA MiCAR Implementation Act), which is currently in the legislative process and is scheduled to enter into force on February 1, 2025.
“Liechtenstein is well-positioned to become a popular destination for market participants seeking MiCAR licences,” said Martin Burgherr, chief clients officer at Sygnum Bank, which recently gained a crypto licence in the jurisdiction.
An established framework
Burgherr told Vixio that Liechtenstein’s well-established regulatory framework for blockchain and crypto-assets means that its financial regulator (FMA) has extensive experience with digital assets and business models in this space.
This regulatory framework is the Token and Trusted Technology Service Provider Act (TTGV), which was introduced in 2019 to govern blockchain and distributed ledger technologies (DLTs) in Liechtenstein, focusing specifically on token-based business models.
Like MiCA, the act defines different types of tokens, such as payment, utility and security tokens, and clarifies their legal classification. It also regulates trusted technology (TT) service providers, which offer services such as token custody, exchanges and other DLT-based financial activities, requiring them to meet specific regulatory standards.
As it stands, the FMA has said that entities regulated under the TVTG can continue their activities during the transition to MiCA until December 31, 2025. However, TT service providers must obtain MiCA authorisation by this date to continue operations, except for those financial firms listed in Article 59(1)(b) of MiCA, which follow different rules.
“The TVTG is closely aligned and even more comprehensive than the EU’s MiCA regulation, and provides a solid regulatory framework,” commented Mauro Casellini, lecturer in digital assets at Zurich’s HWZ University and co-lead at Liechtenstein’s Open Impact Foundation, which focuses on Web3.
Casellini added that the local ecosystem, including banks open to crypto clients, supports a wide range of services, including payments, trading, custody and staking. “This readiness is unmatched in many parts of Europe, where regulatory structures are still being developed.”
The FMA has said that MiCA and TVTG will coexist, each covering distinct areas. For instance, non-fungible tokens (NFTs), excluded from MiCA, may fall under TVTG, and depending on the business model, some providers may need approvals under both regulatory frameworks.
“Liechtenstein’s status as an established financial centre, combined with a progressive regulatory environment and a high ease of doing business, makes it an attractive destination for many players in the crypto sector,” said Burgherr. “Therefore, Liechtenstein has strong potential to further develop as a key hub for the digital assets industry in our view.”
A key location
Casellini said Liechtenstein’s strategic location offers businesses unique advantages. “Situated just an hour from Zurich, it provides seamless access not only to the local market but also to Switzerland’s large job markets like Zug and Zurich.
“This location makes it easy to operate across borders, acting as a gateway to the EU. Companies can quickly access multiple markets without needing to hire in the smaller local market,” he said.
Switzerland has already established itself as somewhat of a crypto hub, close to destinations such as Zug valley, where the blockchain type ethereum was born.
Setting up shop across the Rhein in Liechtenstein, and getting access to passporting rights across the EU market, is likely to be appealing for firms that are already established under the regulatory framework in Switzerland.
“If you already hold a high-level licence, such as a Swiss banking licence, meeting the regulatory standards of a MiCA licence in Liechtenstein isn’t a huge lift,” said Casellini. “Both Switzerland and Liechtenstein are pioneers in this space, boasting some of the highest levels of regulation globally, with similar regulatory approaches across their markets.”
Like Burgherr, he praised the Liechtenstein regulator for its expertise, particularly in the crypto sector, highlighting it as a key advantage while other European regulators are still catching up. “This alignment not only streamlines compliance but also opens doors for companies seeking a familiar and expert regulatory environment.
“With MiCA, we see many regulatory elements mirrored from frameworks like Liechtenstein’s Blockchain Act, illustrating how a small country has effectively established a direct pathway to EU regulation,” he continued. “This alignment makes Liechtenstein a great choice for companies, with strong support from both the government and regulator for digital and crypto innovations.”
In a comment to Vixio, Liechtenstein’s FMA said: “We will begin to accept pre-applications at the beginning of October 2024. Currently we are in talks with interested parties, getting to know their business model and explaining the application process.”
