Crypto License in Liechtenstein

Liechtenstein is a small principality located between Austria and Switzerland. It offers companies working with blockchain technology and cryptocurrency a favorable regulatory environment. This is enabled by the 2020 adoption of the Token and Trusted Technology Service Provider Act (TVTG).

Local authorities promote innovation and collaborate with cryptocurrency business representatives in all available ways. As a result, the principality has become a prime jurisdiction for financial market players seeking long-term growth and legal activities in the virtual currency and token services sectors.

If you aim to obtain a crypto license in Liechtenstein, it’s essential to study the topic thoroughly, including taxation aspects for cryptocurrency companies and the responsibilities their owners have toward the state.

Key Advantages of Liechtenstein License

Obtaining a crypto license in Liechtenstein offers numerous benefits for companies. They gain opportunities for stable growth in a secure environment and other key advantages.

Access to the EU/EEA Market

Liechtenstein is part of the European Economic Area (EEA). This allows enterprises with a Liechtenstein crypto license to operate across Europe, significantly expanding their market presence, target audience, and profits.

Clear Regulatory Framework

The TVTG law regulates the activities of service providers in the field of trusted technologies. It provides legal clarity concerning digital assets and blockchain services.

TVTG outlines token types, licensing requirements, AML obligations, and KYC compliance. The law also emphasizes consumer protection.

Crypto-Friendly Environment

The Government of Liechtenstein supports innovations in blockchain and cryptocurrency. This approach creates favorable conditions for the development of fintech companies.

It also positively influences the establishment of business activities of the Financial Market Authority (FMA). This organization actively collaborates with financial service providers. It not only monitors companies’ compliance with established requirements but also actively promotes their growth.

Strong Banking Relationships

Banks in Liechtenstein are well aware of the specifics of working with virtual currencies. As a result, they can effectively provide services to corporate clients operating in this field. Additionally, their deep understanding of the regulatory framework allows banks to assist companies in complying with AML and KYC policies.

Some financial institutions offer personalized accounts and services tailored to the unique needs of digital asset operations.

Political and Economic Stability

Liechtenstein is a country with a stable economy and a favorable political environment. Another advantage is its strong currency (Swiss franc), which reduces financial risks for businesses.

Reputable Jurisdiction

The country is known for its stable financial sector and strong regulatory framework. As a result, having a license from this country increases trust in the enterprise among clients and investors.

Types of Licenses in Liechtenstein

Several types of crypto licenses are available in Liechtenstein, covering different aspects of the virtual asset market:

• Crypto Exchange License. Allows the licensee to conduct transactions involving the exchange of virtual and fiat currencies.
• Crypto Broker License. Permits intermediary activities in cryptocurrency transactions.
• Crypto Trading License. Required for businesses engaged in trading virtual currencies.
• VASP (Virtual Asset Service Provider) License crypto license in Liechtenstein. It is required for service providers dealing with digital assets. These services may include the exchange, transfer, and storage of cryptocurrencies.

To avoid any issues with regulatory authorities, it is important to choose the type of license that aligns with the direction of your business.

Requirements for a Crypto License in Liechtenstein

Liechtenstein is known as a jurisdiction friendly to cryptocurrency innovation. However, at the same time, all processes related to this area are strictly regulated by the state.

On the one hand, this has a positive effect on the operation of companies, as they can be confident in a stable future, and their clients in the security and reliability of the services provided. On the other hand, it is advisable for entrepreneurs to enlist the support of professionals to ensure compliance with all regulations and rules.

To obtain a cryptocurrency license in Liechtenstein, a number of conditions must be met:

Company Formation in Liechtenstein

It is necessary to register a legal entity in Liechtenstein and ensure a local presence. This means having a physical office in the principality or an authorized company representative.

Minimum Capital Requirements

The minimum capital requirements depend on the nature of the business and range from 30,000 to 250,000 Swiss francs:

Compliance with Due Diligence Requirements

Compliance with due diligence requirements by cryptocurrency companies in Liechtenstein is regulated by the TVTG. Adhering to obligations in this area ensures that the company strictly follows anti-money laundering (AML) and counter-terrorism financing (CTF) standards.

A cryptocurrency company must undertake the following actions:

• continuous monitoring of transactions;
• classifying clients based on their risk level;
• checking clients against international sanctions lists and other databases;
• appointing an officer responsible for AML compliance;
• maintaining reports and providing them to authorized persons in case of detecting suspicious transactions.

IT Security and Infrastructure

The Financial Market Authority (FMA) implements strict security standards for cryptocurrency companies that align with leading international practices.

Here are the key requirements for virtual currency market participants regarding IT security and infrastructure:

• compliance with the ISO 27001 standard and the establishment of clear security policies and procedures in accordance with it;
• implementation of robust cybersecurity measures, such as encryption of confidential data, use of multi-factor authentication, installation of firewalls, etc.;
• ensuring asset security (for crypto custodians and wallet providers);
• GDPR compliance;
• supplier and third-party risk management;
• conducting security audits.

If your company meets all of the above requirements, you can proceed with the process of obtaining a crypto license in Liechtenstein.

Steps to Obtain a Crypto License in Liechtenstein

To become a holder of a cryptocurrency license in Liechtenstein, several steps must be completed. Some of these can be quite complex, so it is advisable for companies to seek the support of professionals.

Choose the Appropriate License Type

Analyze the nature of your activities and select the type of license that corresponds to it. This could be a crypto exchange license, crypto broker license, crypto trading license, or VASP crypto license.

Establish a Legal Entity in Liechtenstein

As mentioned earlier, registering a local company is a mandatory requirement for licensing cryptocurrency businesses in Liechtenstein.

Here are the main steps in this process:

1. Choose a Legal Structure. In the principality, you can register a Limited Liability Company (GmbH), Joint Stock Corporation (AG), or Establishment (Anstalt). Most often, new companies and startups opt for GmbH due to its minimal capital requirements.
2. Prepare a Business Plan. The document should include AML/KYC policies and procedures, as well as a description of capital resources to demonstrate financial stability.
3. Select a Unique Company Name. This must be pre-approved by the relevant authorities – the Office of Justice and the Department of the Commercial Register.
4. Register the Company in the Liechtenstein Commercial Register. For this, the entrepreneur must prepare the appropriate documents.

Prepare Required Documentation

The company needs to form a documentation package that includes:

• corporate documents (Articles of Association, information about its owners and directors, etc.);
• business plan and financial forecasts;
• documents for compliance with AML/KYC regulations;
• documents regarding security and IT infrastructure.

All documents must be translated into German, and the translated copies should be notarized.

Submit Application to the Financial Market Authority (FMA) Liechtenstein

The prepared documentation package, along with the completed FMA 2020/1 Form, must be submitted to the Financial Market Authority. At this time, the application fee of 1,500 CHF must be paid, plus 700 CHF for each additional cryptocurrency activity.

Open a Bank Account

To deposit the required share capital and carry out further operations with fiat money, the cryptocurrency company must open an account in Liechtenstein.

At this stage, it is essential to carefully review the available market offerings to choose the most advantageous banking service option.

Obtain a License

The FMA takes the review of each application for licensing businesses related to virtual currencies and blockchain very seriously. Therefore, be prepared for your application and all submitted documents to be thoroughly scrutinized.

If the review is successful, the applicant will receive a Liechtenstein crypto license.

Cryptocurrency Regulation and Legislation in Liechtenstein

The legislation and regulations that govern the cryptocurrency business in the Principality of Liechtenstein include:

1. Token and Trusted Technology Service Provider Act (TVTG). This is the cornerstone of Liechtenstein’s regulatory framework for cryptocurrencies and blockchain technology. It provides legal clarity on all matters related to the issuance, management, and transfer of tokens.
2. FMA Guidelines. The Financial Market Authority has issued guidance (2020/1) containing information that should be adhered to when applying for a license.
3. Other Financial Market Regulations. For example, cryptocurrency funds must also comply with the Banking Act, the Electronic Communications Act (EGG), and the Alternative Investment Funds Act. If a company is engaged in token issuance, it should not overlook the EU Prospectus Regulation.
4. AML/KYC Rules. Companies operating in the virtual currency sector must strictly adhere to anti-money laundering (AML) and counter-terrorism financing (CTF) standards.

All these legislative acts and standards create a robust foundation for businesses in the digital assets sector.

Cryptocurrency Taxation in Liechtenstein

The main rules for taxing cryptocurrency companies in Liechtenstein are as follows:

Liechtenstein has a rather favorable tax policy, making the country attractive for conducting business.

Audit Obligations

In Liechtenstein, companies are subject to mandatory audits if they meet the following criteria:

• total assets exceed 7.4 million Swiss francs;
• net sales revenue exceeds 14.8 million Swiss francs;
• the company has more than 50 employees on average over the year.

Businesses that do not exceed these thresholds are not required to undergo mandatory audits.

Penalties for Non-Compliance with Crypto Business Regulations in Liechtenstein

In Liechtenstein, any non-compliance with the legislation regarding virtual assets is strictly punishable. Violators may face the following sanctions:

1. Imposition of Fines. This penalty is applied for providing inaccurate reports, lacking proper risk management structures, or violating AML/KYC regulations.
2. Suspension or Revocation of License. Companies that commit more serious violations may lose their license, either temporarily or permanently. For instance, this may occur due to non-compliance with management or capital requirements.
3. Civil and Criminal Liability. Serious offenses, such as fraud or market manipulation, can lead to civil or criminal charges against the company’s owners and directors.
4. Prohibition on Conducting Business. The FMA may restrict the offending company from conducting business throughout the entire European Economic Area.

Professional consultation on obtaining a crypto license (Liechtenstein) can help minimize the risk of sanctions from regulatory authorities.

Cost of Crypto Licensing in Liechtenstein

The cost of obtaining a crypto license in Liechtenstein varies depending on the nature of the business and the number of licenses required.

Generally, the entrepreneur’s expenses will include:

• Application Fee for the License. As mentioned above, this is 1,500 CHF for the first license and 700 CHF for each subsequent one.

Note! The fees paid are non-refundable, even if the licensing application is rejected.

• Operational Costs. This involves depositing a minimum share capital of between 30,000 to 250,000 CHF into a bank account.

Purchasing an Existing Crypto License

This step is attractive for those looking to expedite market entry and avoid the hassle of applying for a license from the FMA. The process of purchasing a license occurs in several stages:

1. Choosing the Right Company for Acquisition. Identify a company that possesses the licenses you are interested in. Then, verify its operational status, financial condition, and history of compliance with regulatory requirements.
2. Contacting the FMA. The Financial Market Authority must approve the transfer of ownership. To do this, you need to provide a package of documents, including the purchase agreement, the new ownership structure, and an updated business plan.
3. Updating Information. At this stage, you need to amend the company’s Articles of Association and provide information about the change of ownership to the Liechtenstein Commercial Register.
4. Transferring Ownership Rights. The new license holder must integrate new management, update internal policies, and ensure the IT infrastructure complies with regulatory standards.

When purchasing an existing license, be prepared to pay an additional FMA fee, which is approximately 1,500 CHF, on top of the acquisition cost.

Lawrange – Your Reliable Partner in the Crypto Business

Lawrange boasts over 10 years of experience in the legal field, with a team of true experts in business support, ensuring the successful completion of your project.

We offer comprehensive assistance to companies aiming to conquer new markets quickly and smoothly. Among other services, our lawyers specialize in obtaining crypto licenses in the most favorable jurisdictions worldwide.

Contact us if you need to acquire a cryptocurrency license in Liechtenstein, and soon you’ll be able to conduct legal and profitable business in this country.

Conclusion

Liechtenstein is one of the jurisdictions that is very friendly to innovation and promotes the development of cryptocurrency companies. It is characterized by robust legislation in the field of digital assets, a transparent licensing procedure, and a favorable tax regime.

Want to navigate the cryptocurrency market in this state? Trust the license acquisition to Lawrange experts! We will make this process as fast and beneficial as possible.

 FAQ

Who is eligible to conduct crypto activities in Liechtenstein?

In Liechtenstein, individuals and legal entities are permitted to engage in cryptocurrency activities if they meet certain criteria set forth by the Token and Trusted Technology Service Provider Act (TVTG). These include mandatory registration of the company in Liechtenstein and its physical representation in the country. There are also requirements related to minimum capital, compliance with AML/KYC regulations, and security and IT infrastructure standards.

Is physical presence in Liechtenstein required to obtain a license?

Yes, obtaining a crypto license in Liechtenstein requires physical presence in the principality. This means having a physical office or a permanent representative of the company residing in the country. This ensures uninterrupted communication with the Financial Market Authority and guarantees compliance with ongoing obligations.

What crypto operations are permitted with a Liechtenstein license?

The Token and Trusted Technology Service Provider Act (TVTG) provides for a wide range of crypto operations that can be conducted in Liechtenstein. These include token issuance, cryptocurrency brokerage services, payment processing, asset management, virtual/fiat currency exchange services, and tokenized asset verification services.

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