Prime Minister of Liechtenstein reveals plans to introduce bitcoin payments for government services

Bitcoin introduced as a payment option

The central European principality of Liechtenstein plans to make the cryptocurrency bitcoin available for payment for the country’s public services in the future. Chancellor Daniel Risch made the announcement in an interview with Germany’s largest business newspaper, Handelsblatt.

Prime Minister Risch, who also serves as Minister of Finance, said that “we plan to introduce a payment option in Bitcoin” for certain government services. The current plan is that receiving bitcoin will immediately convert it into the national currency, the Swiss franc. No specific time was mentioned.

A similar approach could be taken by the canton of Zug in Switzerland, which already accepts state tax payments in Bitcoin and Ethereum, and by making Bitcoin and two stablecoins (USDT and Swiss franc-pegged LVGA) de facto legal tender. It has been introduced in the city of Lugano, which stipulated that

connection:Swiss City of Lugano Makes Bitcoin and Tether De facto Legal Tender

Liechtenstein is a landlocked country surrounded by Switzerland and Austria, and has deep legal and economic ties with both countries due to its historical background. It is the size of Shodoshima (160㎢) and has a population of about 39,000. It is known as a tax haven where corporate tax rates are low and individuals are not subject to income tax.

Development of advanced blockchain law

Liechtenstein, along with Switzerland, has a legal environment that fosters the blockchain and cryptocurrency industry.

In October 2019, the “Tokens and Trusted Technical Service Providers Act (TVTG)” was enacted in the country and will come into force on January 1, 2020. The TVTG, commonly known as the Liechtenstein Blockchain Act, puts all blockchain and cryptocurrency companies under the supervision of the Financial Market Authority (FMA) and requires registration.

Regulatory clarity and open communication with the FMA are attractive factors for cryptocurrency companies, and the number of cryptocurrency companies based in Liechtenstein is increasing.

Blockchain law co-author Thomas Dünser, head of the Liechtenstein Office for Financial Markets Innovation and Digitization, said TVTG was intentionally designed to be flexible and technology-neutral, making it suitable for a wide range of token economies. He also says it can be done.

At the time TVTG was designed in 2016, decentralized finance and NFTs at their current scale did not exist, but for Dünzer, decentralization and NFTs were within his expectations.

He said that because TVTG is “principle- and role-based” rather than “rule- and business-model-based,” it is more adaptable to technological innovation. Under the Blockchain Act, if it poses a risk to users, it will be subject to regulation regardless of the business model.

Compatible with MiCA

On April 20, the European Parliament passed a unified crypto-asset market (MiCA) bill that will apply across the EU. It is said that TVTG functioned as a model for MiCA in terms of legal classification methods (token container model) and licensing requirements based on token functions.

Therefore, Dünzer believes that the two laws are fully compatible with each other, as Liechtenstein’s practices are not expected to change significantly after the MiCA comes into force. Meanwhile, Liechtenstein’s blockchain law has a “comprehensive and robust legal framework for all types of tokenization,” including civil law rights, he said. “We are ready to act,” he stressed.

connection:European Parliament Approves MiCA Regulation, Toward Harmonization of EU-Wide Regulations on Cryptocurrencies

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