30 November 2018

Why Tiny Liechtenstein Is Becoming a Crypto Powerhouse

This article was originally published on coincentral by Sarah Rothrie.

Move over, Malta. So long, Switzerland. The Principality of Liechtenstein is where it’s at, as far as blockchain and crypto in Europe are concerned. A raft of recent developments have seen the country’s regulators and banks start to embrace digital currencies. Therefore, one of the smallest countries in the world is officially becoming the hottest spot on the crypto map.

Here, we explain all the reasons Liechtenstein is one of the best up-and-coming locations for blockchain entrepreneurs.

What Do You Mean, You’ve Never Heard of Liechtenstein?

Well, that may not be entirely surprising. It’s the sixth-smallest country in the world, after all. There are only eight miles between land borders and only 62 square miles in total land area.

In fact, you can walk across it in a single afternoon with plenty of time left over for a beer before sunset. Do it, if you ever get the chance. The Principality of Liechtenstein occupies a stunning location in the Alps between Switzerland and Austria, so the mountain scenery makes for some pretty spectacular views.

Like neighboring Switzerland, it’s not in the EU but a member of the European Economic Area and the Schengen visa zone. Also like neighboring Switzerland, it packs a pretty hefty punch financially–its GDP per capita is one of the highest in the world. Its national currency is the Swiss franc, which is one of the most stable in history.

So now you have the basics, let’s take a look at all the measures Liechtenstein is taking to stand out as a blockchain hub.

It Recently Published a Draft Version of Its National Blockchain Act

While the US SEC grapples with what to do about cryptocurrencies, Liechtenstein is already taking steps in creating a legal framework for the operation and use of blockchain technologies and cryptocurrencies in the country.

The preliminary report is still under government consultation until November. However, as reported by PwC, the draft laws aim to “further promote the positive development of the ‘token economy’ in Liechtenstein and, at the same time, to protect the reputation of the country.”

The document scope takes a long-term approach to the establishment of a token economy. It covers rights to trade tokens, ICOs, development of blockchain technology, and many other areas.

If your German legal skills are up to it, the entire report is available for downloading.

Liechtenstein Bank Is First to Launch Its Own Cryptocurrency

Union Bank AG announced in August that it would be the world’s first regulated bank to issue its own security token. Following this, the bank also plans to launch a digital payment coin that will be fully backed by the Swiss franc. Such a coin could end up rivaling existing crypto payment coins such as Ripple’s XRP.

The move is part of Union’s aims to position itself as a full-service blockchain investment bank. The Chairman of the Board of Directors said that Union Bank is “investing in the future and becoming the world’s preeminent blockchain investment bank.”

Another Liechtenstein Bank Is First to Allow Investments in Crypto

Since February this year, Bank Frick has allowed institutional and professional investors the opportunity to invest in five leading cryptocurrencies – BTC, ETH, XRP, BCH, and LTC. Investments are held in offline cold storage. Plus, all investors must undergo the usual rigorous KYC and AML checks that the bank requires for its standard investors. The origins of the invested cash are also checked.

Bank Frick also offers banking and advisory services to ICOs. While it doesn’t invest in the tokens themselves, having a regulated bank on board helps lend legitimacy to genuine projects.

Liechtenstein Crypto Assets Exchange Has Partnered with Binance

The Liechtenstein Crypto Assets Exchange (LCX) and Binance announced their partnership in August, bringing a national fiat-to-crypto exchange to the principality. LCX existed previously as a trading platform for professional investors. In the partnership, LCX will manage government liaison, customer support, and KYC/AML checks, whereas Binance will bring in their scalable exchange platform.

The exchange will initially offer trades in Euros and Swiss Francs against major cryptocurrencies. However, it hopes to bring in new trading pairs over time subject to regulatory approval. Considering Binance didn’t even exist until a little over a year ago, the fact that the company is already operating under national regulations at a country level is a testament to how far the exchange (and the crypto business overall) has come.

It Has a House of Blockchain

Yes, a nation of only 40,000 people and they get a House of Blockchain.

It’s actually a co-working space launched to support blockchain startups. House of Blockchain is the brainchild of the team behind Aeternity, the DApp platform.

It opened its doors in May. Initially, it will house ten blockchain startups including WeOwn (formerly Chainium), the equity crowdfunding network for businesses.

The Prime Minister Fully Supports Crypto and Blockchain

The Prime Minister of Liechtenstein, Adrian Hasler, has been either driving or supporting all of the above. In contrast to many government officials, he is a strong proponent of blockchain technology and its continuing adoption.

In an interview with Cointelegraph, Hasler stated his firm belief that: “Blockchain can serve as an important base for a variety of economic applications, covering not only payment transactions but broader financial solutions, industry use cases, and general applications.”

He believes Liechtenstein is becoming so popular as a blockchain hub partly due to its small size. This means it’s relatively quick and easy to organize a face-to-face appointment with the financial regulators of the country.

However, we can compare the open mindset of Hasler with the continued reticence of the US SEC to issue any formal approvals for a Bitcoin ETF. Surely the fact that his government is welcoming developments in blockchain with open arms also helps to attract innovators.

Final Thoughts

So there it is. Liechtenstein has plenty going for its potential as a crypto hub, despite its diminutive geographical size. However, its size does create a challenge for effectively marketing Liechtenstein as a potential location for blockchain entrepreneurs. Especially outside of Europe, many people have never heard of the country. Therefore, it has plenty of work to get on the radar of crypto startups looking for the best location for their next project.

Nevertheless, successful marketing isn’t a blocker to building an attractive base for blockchain startups and innovators. Added to that, it’s a genuinely beautiful, peaceful and stable country offering a high quality of life for residents. While there are still many contenders for the next big crypto hub, little Liechtenstein could one day eclipse them all.

Become a Member (It’s free!)

Grow your network with entrepreneurs and coaches from 100+ countries.
Back to all articles