Future of Finance


The Liechtenstein law that is actualizing the dream of the token economy

The Liechtenstein law that is actualizing the dream of the token economy

Liechtenstein was the first jurisdiction in the world to pass a comprehensive law on tokenization.  When the Token and Trustworthy Technology Service Provider Act (TVTG) became law on 1 January 2020, it became possible for issuers to tokenize any asset that exists in the physical world – from real estate, through precious metals and collectibles, to securities such as equities and bonds – with the comfort of legal certainty. 

Dr Thomas Dünser, director of the office of financial innovation of the Government of Liechtenstein and a member of the Supervisory Board of the BFG Blockchain Founders Group in the principality, told Dominic Hobson how intermediaries, issuers and investors are using the law to make a reality of the coming “token economy.”

Questions that are being asked

  1. Liechtenstein has had blockchain law (TVTG) since January 2020. What use has been made of it so far? 
  2. EU law is helpful to the TVTG at present (e. g. EU law insist on retaining a CSD) but tokenisation platforms in other jurisdictions have accepted that limitation and it will in any event change, at least for crypto-assets, in 2024 when a new EU law comes into effect. Why not act now to get ahead of the competition?
  3. As a member of the EEA, Liechtenstein can already passport tokenised services into the EU, so being a tokenisation centre now could lead to rapid growth. Is that not another argument for acting more aggressively now? 
  4. What sort of assets have been tokenised so far in Liechtenstein (e. g. mutual or alternative funds, crypto-currency funds, real estate, gold, car receivables) and on what scale?
  5. Where are the issuers coming from in terms of jurisdictions and industries? 
  6. Bank balance sheets are strained, so there is a rising expectation that banks will want to tokenise assets. Is this a trend which you are observing? 
  7. Are some or all the private banks in Liechtenstein helping to structure the issues?
  8. Are Liechtenstein law firms getting involved in advising issuers? 
  9. How much of the experimentation that has taken place so far is reality, as opposed to proofs of concept or pilot studies or even effectively just sales and marketing?
  10. When do you expect the tokenisation market in Liechtenstein to mature from the retail to the institutional?
  11. Trust companies to help set up a legal entity are a longstanding feature of the Liechtenstein marketplace, and a start-up (Amazing Blocks) has digitised and tokenised the process. How important are services of this kind in helping Liechtenstein to grow as a tokenisation centre? 
  12. Where are the investors coming from – are they clients of the private banks or of the asset managers in Liechtenstein (or both)? 
  13. Are asset managers in Liechtenstein more enthusiastic about tokens than the private banks?
  14. What are the obstacles to rapid progress in exploiting the tokenisation law and opportunity in Liechtenstein – is it legacy systems or conservative attitudes or a lack of issuers and investors or something else?
  15. A regulated secondary market or trading platform would clearly help tokenisation to take off, yet Liechtenstein does not have its own regulated stock exchange even of the traditional kind. Is that a handicap in growing a tokenisation market?
  16. What prevents the private banks and/or asset managers in Liechtenstein setting up a token exchange? 
  17. Are there any conceivable circumstances under which the government might step in to directly create or indirectly encourage creation of a token exchange?
  18. How do you see the Liechtenstein tokenisation market evolving over the next five years?