The small landlocked country of Liechtenstein has long been known for its business-friendly environment and financial and banking hub. But over the past years, the country has positioned itself to become a top fintech hub, leveraging its experience and expertise to attract foreign entrepreneurs, and especially those tackling blockchain and crypto.
With a population of less than 40,000 people, the Liechtenstein market is rather tiny and not that much of an appeal. Rather, it is the location’s high expertise in financial services, its important financial center, which primarily focuses in financial services for foreign entities, and the government’s openness toward fintech that have made Liechtenstein an attractive location for entrepreneurs.
Additionally, Liechtenstein’s close relationship with Switzerland and the fact that it’s part of the European Economic Area deliver grounds for expansion of fintech businesses.
Government support
In the era of digital and technology, the Liechtenstein government has recognized the need to provide a supportive regulatory framework that would attract foreign fintech players.
The Financial Market Authority (FMA) of Liechtenstein has committed to designing regulation in such a way that established financial service providers and new enterprises are able to implement their business models.
In June 2018, the FMA established the Regulatory Laboratory/Financial Innovation Group, which acts as an interface between the market and regulators and facilitate communication. The group is responsible for the fields of digitalization in the finance industry and financial innovation.
This summer, the so-called Blockchain Act came into force. With the new law, the government aims to strengthen the legal certainty around blockchain and cryptocurrencies in order to further promote the positive development of the “token economy” in Liechtenstein.
A focus on blockchain and crypto
Blockchain and cryptocurrency has been one of the most developed fintech segments in Liechtenstein, and undeniably, one of the country’s key area of focus.
Yanislav Malahov, who was closely involved in the creation of Ethereum, has founded Aeternity, the first blockchain-based project in Liechtenstein with a market capitalization of over US$1 billion. Aeternity is a blockchain network which allows for hosting smart contracts and decentralized application (DApp) developments off the main network, making it run faster.
Several other companies have also launched within the country, with services including cryptocurrency ATMs, exchanges, as well as blockchain and crypto advisory services.
LCX, the Liechtenstein Cryptoassets Exchange, was granted a license to provide crypto trading services for utility and payment tokens last year. LCX’s goal is to become among the world’s first licensed and supervised blockchain banks.
Further, community initiatives such as the widely attended monthly Blockchain Meetup at the Liechtenstein Technopark, as well as the establishment of the Crypto Country Association, have provided industry participants with representation and networking opportunities.
Besides startup entrepreneurs, financial institutions in Liechtenstein have too begun offering crypto-related services. Balzers-based Bank Frick recently expanded to include trading and custodial services for crypto assets, including crypto cold storage solutions. The bank announced in February the establishment of a subsidiary called DLT Markets that focuses on providing institutional investors with a trading platform with fully regulated and secure multi-exchange access to the digital token asset class.
Fintech and Blockchain Community Meets in Schaan
On October 23, 2019, the annual Finance Meets Future conference will take place in SAL in Schaan. The event is set to bring together startups, financial services providers, corporates and policy makers to discuss the latest trends in fintech. (You will get 25% discount with the Code: Fintech25)
Participants will get to meet fintech and blockchain specialized tax and legal experts, get in contact with Liechtenstein’s FMA and other officials from the government, as well as interact with specialists from the fintech and blockchain industry.
