Category Archives: Liechtenstein

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Switzerland to Adapt Existing Laws to Accommodate Blockchain

Switzerland to Adapt Existing Laws to Accommodate Blockchain

Contemplating a separate blockchain legislature are out of the question for the Swiss as the Finance Minister Ueli Maurer said Switzerland will instead adapt the current legal framework to account for blockchain technology.

Maurer said during the Infrachain blockchain conference in Bern that there won’t be a special blockchain law, instead, the current legal framework will be tweaked to adapt to the new technology and its derivatives. This will involve an adaption to six different laws starting with the “laws of obligations and ending with bankruptcy law”. The whole process should be completed in the coming year.

About a year ago, in a fintech round-table discussion involving the minister and other financial and scientific stakeholders, attendees agreed upon the urgency of attention to the development of blockchain and initial coin offerings (ICO). This led to setting up a committee to determine the necessary actions to be taken towards the development and adoption of the new enterprise.

Blockchain interest in the country has taken up a rather interesting turn with jurisdictions such as London, Singapore and Shanghai identified as “tough competitors”. However, countries like Liechtenstein are ahead of the Swiss in terms of blockchain-related legislature with a bill already in motion will be passed in 2019.

Blockchain developments (standardization) and regulation are currently being considered simultaneously in Switzerland to effectively groom the industry. With FINMA proposing a structural operational model for financial institutions to work against the volatility of the market on one hand. Switzerland’s State Secretary Joerg Gasser has opined that standards are now more important than regulation since according to him, fintech has moved beyond the “hype-cycle”. On the horizon, more utility use for blockchain enterprise seems to be developing as well.

 

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First Fully Compliant Crypto Exchange Under New European Framework to Open in Liechtenstein

Under the most recent guidelines from the European Securities and Markets Authority (ESMA), the first fully compliant cryptocurrency exchange is now open for registration in Liechtenstein.

ESMA’s new framework MiFID II/MiFIR was introduced in January 2018 to offer consumers an extra level of protection. The Markets in Financial Instruments Directive (2004/39/EC) has been applicable across the European Union since November 2007.

It is a cornerstone of the EU’s regulation of financial markets seeking to improve their competitiveness by creating a single market for investment services and activities and to ensure a high degree of harmonised protection for investors in financial instruments. The new updated legislation (MiFID II) was introduced to further strengthen investor protection and improve the functioning of financial markets, making them more efficient, resilient and transparent.

Liechtenstein-based Blocktrade.com cryptocurrency exchange opens in full compliance with these new European regulations, the beta version reported to be the first of its kind.

The exchange promises to trade in Bitcoin, Bitcoin Cash, Litecoin, and Ripple, offering users feedback rewards via the platform’s “Need Help” widget and a “Beta Feedback” option. Users sending in feedback stand to win an iWatch as part of the prize draw.

Blocktrade.com’s CEO, Luka Gubo feels that the platform adhering to the new EU guidelines will give greater credibility to cryptocurrency use in general. He said:

“This is an ideal way for regulators across Europe to recognize cryptocurrencies as a new asset class and put in a regulatory framework.”

It is commonly felt in the industry now that sensible and clear regulation will impact on the crypto ecosystem as a whole, and this is reflected in the global move towards regulation.

Liechtenstein’s prime minister recently stated he wanted his country to be at the forefront of the digital age, suppressing any burdensome regulations on blockchain technology. Its aim is to provide its citizens with sensible but cohesive blockchain regulations.

The Ukrainian government is another European nation leading this drive towards sensible cryptocurrency and blockchain regulation. The head of the Ukraine National Securities and Stock Market Commission, Timur Khromaev, has recently suggested that the way to move forward is to recognize cryptocurrencies as tokens and financial instruments, which will then necessitate government regulation and licensing rules, all of which is currently absent in Ukraine.

This, he suggests, would be “an important first step in building a consensus among government agencies and financial regulators”.

 

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Geographical Minnows in the Hunt for New Crypto Business

Many small countries with flexible regulatory guidelines towards cryptocurrencies and friendly banking rules are pulling some companies away from some of the more established “havens” such as Switzerland.

Many in the industry have recently expressed concerns that Switzerland may be losing its “crypto-haven” tag,  primarily because of current banking regulations in the alpine country. Thomas Moser, a board member of the Swiss National Bank, told Reuters recently that some fintech companies still had trouble opening accounts:

“They raised concerns about problems with opening bank accounts, which was a worry for them, and asked for help… I said this was not something the SNB dealt with, but they should speak with FINMA.”

This sounds like a less than genuine approach by the central bank as FINMA, the Swiss cryptocurrency-friendly regulatory body, continually has to deal with SWB’s continued concerns about money laundering.

Recent countries in the hunt for business are Liechtenstein and Gibraltar; elsewhere, the Cayman Islands and Bermuda are fast becoming start-up favorites, the latter recently when Bermuda shorts-wearing Changpeng Chao, CEO of Binance, announced he would open up compliance operations there and invest USD 15 million in the island.

Just in the last week, Bermuda’s Prime Minister David Burt, who also doubles as Minister of Finance, announced that 20 fintech companies had incorporated in Bermuda and another 21 were waiting in reserve. The list of 20 included Binance, Unikrn, iCash, Hub Culture, DES Digital Currency Exchange and Omega One with both Arbitrade Ltd and Arbitrade Mining (Bermuda) Ltd listed.

Bermuda has not only captured the world’s largest crypto company in Binance but, through its prime minister, has also expressed the desire “to position Bermuda as the incubator for this industry”, as Burt recently said at a New York blockchain conference.

The Rock of Gibraltar seems an unlikely place for a financial hub but nonetheless, it is, like Bermuda, fast becoming one, as it continues to lure new and existing fintech companies to its shores. Its second ‘Gibfin’ blockchain forum is on its way in September 2018, demonstrating the country’s serious intent when it comes to encouraging fintech companies to do business there.

Gibraltar is also about to finalize its cryptocurrency legislation which would allow companies to trade in digital currencies. Currently, 35 companies have applied for a government license.

Tiny Liechtenstein isn’t to be left behind either. The country’s proposed new Blockchain Law would take Liechtenstein down the “haven” route offering “crypto companies regulatory and legal predictability as well as enabling the country access to traditional fiat-based banking services”.

The law, originally scheduled for legislation on 10 July, is still on hold as the industry awaits further announcements later in the year.

Despite the obvious competition from these geographical minnows, Switzerland forges ahead regardless to become Europe’s cryptocurrency capital. Recent moves towards allowing cryptocurrency trading on its new SIX Digital Exchange is a clear notice of intent.

 

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