USP of Liechtenstein for Blockchain Business

27 March 2020

What is the USP – unique selling proposition – of Lichtenstein as a place to start or to continue your blockchain business? 

What is the difference of Liechtenstein compared to other jurisdictions such as Estonia, Gibraltar, Malta or Switzerland?

Why should you consider Liechtenstein as a place for your blockchain projects?

Read about the significant advantages of doing business in this tiny country.

Geographic location
First of all your might have heard that Lichtenstein is a tiny state located between Switzerland and Austria. It is one of the smallest states in the world that actually exists, but thanks to the size of the country it can offer to a business a really fast speed of how the state authorities work and everything is done.

Blockchain Act
You might have heard about this country in relation to the Blockchain Act, because Lichtenstein is one of the first countries in the world to introduce a very systematic regulation for doing all sort of blockchain businesses. They give the definition of what is token, how token is transferred on blockchain and how rights related to tokens are also transferred, what is fundamental for trading with tokens and tokenized assets especially.

Also, it offers the basis for a wide range of token services providers both crypto exchangers, token generators and issuers. By the way, you may download the summary of the Blockchain Act on our homepage.

Access to European single market
The most important fact for all security tokens – since they are normally financial products – is that Lichtenstein (not a member of the European Union, but a member of the European Economic Area) has access to European single market. Using passporting procedure and notifications, you may be able to distribute your security tokens throughout the entire European Union.

Low-tax Jurisdiction
In general, Lichtenstein is a jurisdiction that from the very beginning used to be some sort of an offshore country. Its deal is a low-tax country, which is good for holding companies, for various businesses. Its deal offers really favourable tax conditions for all sort of businesses and especially also for blockchain businesses.

100%-compliant country
It is important to mention that over 10-15 years ago they decided that they are going to be 100%-compliant and that is how they work right now, i.e a low-tax jurisdiction, 100%-compliant with all the European legislation and all the tax requirements.

Liechtenstein vs. other jurisdictions 
I do not really want to compare with other countries, because it might seem to be unfair to some of the countries. They also do their best to be attractive for blockchain businesses and IT companies. But still, if you compare Lichtenstein, Malta or Estonia, Lichtenstein has a similar quality of the legal system as Switzerland.
It is a tiny country; it has taken a part of its legislation from Switzerland and a part from Austria. The whole legal system and how the state works is more a sort of Swiss code standard, especially compared to other jurisdictions, when some other countries also form offshores.

Banks for blockchain projects
It is really important that banks both in Switzerland and Lichtenstein work with blockchain projects. It’s not that easy, because it requires quite a lot of time, attention and sometimes expenses related to passing the compliance procedure. But still, there are around 10 to 15 banks that work with blockchain projects. Furthermore, all the banks in Switzerland work with crypto and they work with companies from Lichtenstein. It is important to mention it.

Financial centre with the rating AAA+
Liechtenstein has a history as a financial centre. It has around 15 banks, also over 10 fund management companies. It used to be traditionally a place for trust services until the Common Reporting Standard by OECD was introduced. Right now blockchain is coming in and especially the application of blockchain for financial markets for security tokens.

Lichtenstein has overall or used to have in the past couple of years over 300 billion assets under management. And it has as economic and political system state ratings AAA+ by S&P, Moody’s, etc. Above all, it is a very stable state, a constitutional monarchy.

State-as-service approach
It should be added that both in Switzerland and Lichtenstein you are able to see this state-as-service approach. All the businesses coming here, on the one hand, of course, would need to comply with all the regulations, and sometimes it is not that easy, as somewhere on the Cayman Islands. But on the other hand, it shows certain quality for investors and for consumers of your products or services, because it is a jurisdiction that combines the flexibility of a small state with a quite high level of standards in the regulation of financial markets.

We will be happy to support your DLT/blockchain projects in Liechtenstein.  

Open for your questions and comments. 

#RLPLawyers #STO #Switzerland #Liechtenstein #BlockchainProjects