During the first reading of the bill, the original name of the law, the “Act on Transaction Systems Based on Trusted Technologies” (Gesetz über auf vertrauenswürdigen Technologien beruhende Transaktionssysteme), was changed to the “Act on Tokens and Entities Providing Services Based on Trusted Technologies” (Token- und VT-Dienstleister-Gesetz (TVT-Gesetz)). Members of the parliament admit that the subject matter is hard to grasp, but take the view that the potential of new blockchain-type technologies is so powerful and promising for the country’s further development that the positive aspects outweigh any possible risks.

The bill provides for state-of-the-art regulation of various transactions using decentralised technologies in areas such as financial services, logistics, mobility, energy and media.

Given the rapid evolution of blockchain technologies and the equally quick development of their applications, the definitions in the new act must be sufficiently abstract, as this is the only way they can remain current and binding for next-generation technologies. This is also why the bill employs the notion of “transaction systems based on trusted technologies” (VT-Systeme), not limited exclusively to the models of blockchain or initial coin offerings.

The bill includes a definition of “token” as a digital embodiment of all types of rights in a system of trusted technologies; in other words, it is a kind of digital vessel containing or manifesting certain rights. This possibility of capturing rights in tokens generates fundamental legal challenges which the new act attempts to answer. Aspects of generation and storage of tokens by service providers are crucial. The new act uses this to ensure that the reflection of the real world in the form of tokens within transaction systems based on trusted technologies always occurs in the legally safest manner.

The act also introduces into the Liechtenstein legal system a new legal construction called “Wertrecht.” This new legal category enables securities to be embodied digitally in the form of a token, to facilitate the conduct of transactions based on trusted technologies. In the act, “Wertrecht” means a dematerialised security, and issuance of a paper certificate is replaced by entry of this right into an electronic Wertrechtebuch.

The first reading of the bill was met with great interest both nationally and internationally. The parliamentarians raised questions of civil law and issues connected with the system for registration of tokens provided for in the act, and oversight of service providers by competent state institutions. In this respect, the structure and organisation of the act were adjusted to make a clear division between the civil-law and public-law (administrative) sections of the act. There was also a thorough discussion and clarification of the definitions used in the act, and the system of registration and supervision provided for in the act was also strengthened.

The parliamentarians agreed that the new act is exceptional for Liechtenstein. Most of the laws in force in the principality are rooted in the laws of neighbouring countries (typically Switzerland or Austria), but this time they adopted a bill that was “made in Liechtenstein” from start to finish. The members of parliament are awaiting the government’s response to the inquiries they raised about the bill before proceeding to a second reading. But the path is now clear to ultimate adoption of an exceptionally innovative new law.

Harald Marschner