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General climate and trends

General innovation climate

What is the general state of fintech innovation in your jurisdiction, including any notable trends, innovations, innovators and future prospects?

Many reputable players on the blockchain scene have come to Liechtenstein to start their businesses. For example, Yanislav Malahov (who was closely involved in the creation of Ethereum) has founded Aeternity – the first blockchain-based project in Liechtenstein with a market capitalisation of over $1 billion. Ultimately, Aeternity is a project focused on smart contracts, allowing for the execution of credible transactions through the use of blockchain technology without the help of third-party intermediaries.

Communications with the local regulator – the Financial Market Authority (FMA) – are very efficient, as the FMA established its own fintech department in June 2018. Further, a so-called regulation laboratory has been established to further the proliferation of fintech businesses.

In addition to these local projects and advancements in favour of fintech innovation, the so-called Blockchain Law is anticipated to come into force in Liechtenstein in Summer 2019. In general, the government – along with the prime minister and even the prince – is very open minded to fintech projects.

Further, there is a widely attended monthly Blockchain Meetup at the Liechtenstein Technopark. In addition to these monthly meetups, the Crypto Country Association has been founded, which deals with various topics relating to the crypto ecosystem in Liechtenstein.

The success of established and young companies is ultimately furthered by general state conditions, which are especially favourable to blockchain-based projects. The Ministry of Presidential and Finance has created innovation clubs, serving as an instrument enabling companies to contribute their ideas for improving the framework of conditions in an unbureaucratic manner. Moreover, the Ministry of Presidential and Finance offers all market participants from Liechtenstein and abroad the ability to engage in a transparent process for implementing their ideas to improve the conditions of the local framework. Ultimately, successfully tested ideas are supported in direct contact with the ministry until they are implemented.

The ability to build new disruptive business models is crucial to the strategic competence of an economy. At the same time, while financing start-ups always poses great challenges, so does the question of what exactly constitutes an optimal level of support. Through favourable business conditions and state support, the Liechtenstein government has created an incubator in cooperation with private partners, leading to the successful establishment of start-ups in Liechtenstein. SEED X Liechtenstein offers capital, while at the same time possessing an optimal infrastructure including intensive support from professional coaches, providing excellent support for start-ups in the seed phase including investment management, which is carried out by internationally renowned personalities. SEED X Liechtenstein is a privately financed investment company.

Key technologies

Have there been any particular developments – regulatory or commercial – in any of the following fintech sectors?

Distributed ledger technology and digital currencies (eg, blockchain, smart contracts and Bitcoin)?

On the regulatory front, it is the intention of the government to enact the Blockchain Law which will regulate certain business projects based on ‘trusted technologies’ such as distributed ledger technology and blockchain technology. Through this regulation, the government is aiming to support and monitor while regulating. This ensures assistance while also avoiding uncontrollable growth. Ultimately, this serves to attract crypto projects while also providing legal certainty.

On the commercial side, several companies have launched within the country, with services ranging from the installation of cryptocurrency ATMs to blockchain and crypto advisory services, as well as exchanges. In general, the regulatory climate has made it favourable for these companies focused on blockchain technology and cryptocurrencies to establish their commercial domiciles in Liechtenstein.

Alternative lending platforms?

There are financial institutions offering merchant credit investments and cryptocurrency investments. Both are alternative investments comparable to high-yield investments, therefore possessing a constant cash flow. Both can be used for portfolio diversification.

One example would be Liechtenstein-based Bank Frick, which has expanded from the realm of traditional banking to include trading and custodial services for crypto assets, including the allowance of crypto ‘cold storage’ solutions. 

Further, over-the-counter trading desks have formed within the country, allowing for high-volume transfers of cryptocurrencies for investors seeking to avoid the volatile nature of traditional online exchanges.

Digital payments, remittances and foreign exchange?

The rules regarding digital payments, remittances and foreign exchange are harmonised throughout the European Union and the European Economic Area pursuant to the Payment Service Directive, as well as other authorities.

Alternative financing (including crowdfunding)?

An EU directive on crowdfunding will be enacted in the near future which will have an impact on Liechtenstein jurisprudence, due to the harmonisation of Liechtenstein and EU law on account of Liechtenstein’s membership of the European Economic Area. As of now, an initial coin offering (ICO) or a token generation event (TGE) may be regulated in Liechtenstein if security tokens are being issued. In general, there is no singular act specific to ICOs that regulates crowdfunding, but several existing laws may apply.

Although no specific act currently applies directly to ICOs, the passage of the Blockchain Law will directly apply to token-generating events.

Investment, asset and wealth management?

These areas are widely harmonised within the European Union and the European Economic Area under the EU Markets in Financial Instruments Directive regime. Activities of such financial institutions as well as required prospectuses for security tokens may be notified (ie, ‘passported’) within the European Union and the European Economic Area.

Robo-advice and artificial intelligence?

Depending on the designated business plan, robo-advisory and/or artificial intelligence (AI) may be qualified as a form of asset management (ancillary securities service).

Ultimately, the regulation surrounding any automated platform would depend on the type of token being traded. Bitcoin itself is not a security, but the Liechtenstein government is moving in the direction of classifying ICOs that meet certain requirements as securities, thus subjecting those particular tokens to regulation.

Therefore, any kind of AI applied to the trading of officially recognised securities is subject to regulation by the authorities. Conversely, any AI applied to the trading of utility or commodity tokens does not require a licence from the FMA.

Any other technologies?

A plethora of other business models are possible and plausible due to recent technological development. Peer-to-peer lending, to name but one, is easily feasible with blockchain technologies. However, while easy to implement, such a business might be illegal if executed without the corresponding licences.

Further, the regulatory environment in Liechtenstein can be viewed as favourable to start-ups focused on alternative blockchain applications such as smart contracts and blockchain-based voting.

Regulatory issues

Regulatory approach

How would you describe the regulatory policy for fintech products and services in your jurisdiction?

Communication with the Liechtenstein Financial Market Authority (FMA) is excellent. Therefore, any new projects may be introduced in a personal meeting with the FMA. Usually a legal opinion examining the business model and the token functionality (if a token is issued) will be filed with the FMA in order to receive a preliminary examination. If no regulation applies, the FMA will issue a so-called ‘no-action letter’ indicating that the intended business does not fall under its jurisdiction.

Have any fintech-specific laws or regulations been enacted in your jurisdiction? Are any envisaged?

Thus far, regulations regarding aspects of fintech are rather sparse. For example, virtual currencies (which include cryptocurrencies) are defined in the Liechtenstein Due Diligence Act with regard to currency exchanges. Additionally, after the preliminary release of the Blockchain Law, the Liechtenstein government is envisaged to regulate token economies as a whole, but not in a manner that would dissuade development of commercial businesses related to blockchain and cryptocurrency applications.

Regulatory authorities

Which government authorities regulate the provision of fintech products and services?

The FMA is the supervisory authority with regard to all matters affecting financial markets. Thus, the regulation of fintech products and services falls within the scope of the FMA’s regulatory authority.

Financial regulatory framework

Which laws and regulations governing the provision of financial services apply to fintech businesses?

Currently, various pre-existing laws and regulations may apply. Potentially applicable regulations may include (among others):

  • the Banking Act;
  • the Asset Management Act;
  • the Payment Services Act;
  • the E-money Act;
  • the Act on Alternative Investment Funds;
  • the Insurance Act;
  • the Due Diligence Act;
  • the Consumer Protection Act; and
  • the Distance and Foreign Trade Act.

Further, the anticipated Blockchain Law will undoubtedly shape the governance of fintech businesses within Liechtenstein.

Under what conditions are fintech businesses subject to licensing requirements? Are there any exemptions?

If the services provided are subject to regulation under the aforementioned laws, licensing requirements will likely apply (although several exemptions may apply depending on the exact activities conducted). Even if no special permit is required pursuant to the Financial Market Supervision Act, a permit may still be necessary in order to apply for a trade licence.

Are any fintech products or services prohibited in your jurisdiction?

Normally, the general regulatory framework applies. Supposing that this framework is exceeded, the relevant activity will be deemed prohibited (if executed without a corresponding licence). Examples of problematic activities include peer-to-peer lending services as well as naked short-selling activities.

Data protection and cybersecurity

What rules and regulations govern the processing and transfer (domestic and cross-border) of data relating to fintech products and services?

As Liechtenstein is a member of the European Economic Area, the EU General Data Protection Regulation (GDPR) applies. Liechtenstein is free to regulate further in this area, so long as such further regulations do not conflict with or fall outside the scope of the GDPR.

What cybersecurity regulations or standards apply to fintech businesses?

Although no specific regulations apply, the common liability law in Liechtenstein is relatively strict, meaning that the strategic management level of an entity may be held liable for failing to install appropriate cybersecurity measurements.

Financial crime

What anti-fraud, anti-money laundering or other financial crime regulations govern the provision of fintech products and services?

The harmonised Due Diligence Act applies to fintech services as well as standard services, thus covering all aspects of ‘know your customer’ (KYC) and anti-money laundering. Further, a Financial Intelligence Unit exists which observes and analyses any potential financial crimes.

These KYC and anti-money laundering regulations do not apply to strictly crypto transactions, but do apply where the involvement of a third party falls within the scope of KYC and anti-money laundering regulation. For example, where the holder of crypto assets wants to exchange the crypto for fiat currency, the involvement of a bank triggers KYC and anti-money laundering regulations. Another example would be a customer who is looking to start a cryptocurrency exchange, acquiring the funds for the exchange’s foundation by the use of an initial coin offering (ICO). In this case, the ICO itself does not fall within the scope of regulation. Instead, the regulations are triggered when the exchange itself is formed and is required to state the source of the funds used for the founding of the exchange. Here, it is not enough to simply state that the exchange was founded by use of funds from an ICO; rather, the party founding the exchange would need to provide additional information regarding the source of the funds stemming from the ICO.

What precautions should fintech businesses take to ensure compliance with these provisions?

Although there are no precautions specifically tailored to fintech businesses, these businesses must fully comply with the Due Diligence Act as long as fiat currency is involved.

These businesses can ensure compliance by keeping records in the event that the above-stated problem occurs and they later decide to use cryptocurrencies in subsequent transactions involving regulated parties.

Consumer protection

What consumer protection laws and regulations apply to the provision of fintech products and services?

Both Liechtenstein and EEA standard consumer protection laws, as well as distance and foreign trade laws, may apply. These laws stipulate a mandatory right of consumers to withdraw from agreements within 14 days after conclusion. Consumers must be fully informed about their right to withdraw from an agreement or it may be nullified at any time. With a token sale, these rights can be excluded under certain conditions (a decision by the consumer to waive this right of withdrawal from contracts is possible if the consumer has been informed comprehensively about these rights and the consequences of waiving them). With an early contribution agreement or simple agreement for future tokens, such a waiver is not possible as the mutual considerations must be exchanged instantly (delivery versus payment), which is not feasible if the tokens have not yet been generated.


Does the provision of fintech products or services in your jurisdiction raise any particular competition regulatory concerns?

As with any commercial product or service, competition regulatory concerns may arise. Thus, this is not a problem specific to fintech products or services.

Cross-border regulation

Are there any particular regulatory issues concerning the cross-border provision of fintech products and services (eg, operating jurisdiction rules and currency controls)?

As with any cross-border business, the problem may arise that a foreign regulatory authority deems itself competent, classifying the businesses from a different regulatory point of view than that of the other jurisdiction. This generally appears in connection with the target market of business operations. If marketing is directed at foreign jurisdictions, the respective foreign authority may possess the ability to regulate the business. In addition, as with all cross-border activities, tax regulations play an important role.

Financing, investment and government support

Government support

Does the government provide any incentives or support programmes to promote fintech innovation in your jurisdiction (eg, tax incentives, grants and regulatory sandboxes)?

In general, the Liechtenstein government is very open minded towards fintech businesses. It has created a regulatory sandbox (a so-called ‘regulation laboratory’) which provides leeway, creating an environment favourable to implementation of fintech business models. At the same time, the supervisory process is designed by the Financial Market Authority in such a way that the quality characteristics of financial market supervision required in an international context can be maintained. If necessary, adjustments to the legal and supervisory framework conditions are carefully examined and then proposed for implementation.

In regards to the tax question, Liechtenstein provides a remarkably favourable environment for businesses in general, due to the mere 12.5% flat tax on corporations. Once this amount is paid, the business owes no further financial obligations to the government, as no capital gains or sales taxes are levied within the country. Further, there are plenty of incentives in terms of the presence of capital available to worthwhile ventures. This available capital is aimed at furthering investment, growth and research and development activities.

Has the government concluded any international cooperation agreements to promote and facilitate the cross-border expansion of fintech businesses?

As Liechtenstein is part of the European Economic Area, the financial markets of Liechtenstein are in harmony with EU regulations. In addition, Liechtenstein has a close relationship with Switzerland, which delivers further grounds for expansion of fintech businesses.

Ultimately, Liechtenstein’s membership of the European Economic Area creates a favourable environment for the creation of fintech start-ups, because the creation of a fintech business in Liechtenstein allows for the establishment of relationships with Switzerland as well as the European Union. In other words, by establishing a business in Liechtenstein, one has the best of both worlds, with access to benefits that would be awarded by establishing a business in Switzerland as well as those awarded to EEA member states. This creates a two-for-the-price-of-one situation, as opposed to having to choose between the benefits of incorporating in either Switzerland or an EU member state.

Financing and investment

What private financing and investment schemes are available and commonly used for fintech start-ups in your jurisdiction?

All the classic and historical finance and investment schemes available in Liechtenstein have grown into a highly sophisticated financial market. From initial public offerings to the raising of venture capital or more commonly used crowdfunding options, initial coin offerings or token generation events, the investment schemes available to start-ups are endless.

Ancillary issues

IP rights

What forms of IP protection are available for fintech innovations?

Liechtenstein law provides a wide range of IP protections (copyright, trademark, design and patent). The most important legislation in this regard is the Copyright Act. Under this law, even computer programs or code may be copyrighted under certain circumstances, which may be particularly enticing for developers of a blockchain or smart contracts. Further, databases may also be subject to protection regarding the extraction or use of information contained therein.

What rules govern the ownership of IP rights to fintech innovations?

Since Liechtenstein law contains no specific provisions concerning IP rights to fintech innovations, the general rules regarding the ownership of IP rights apply and are thus relevant in this regard. Aside from the Copyright Act, the Design Act and the Trademark Protection Act (including the corresponding ordinances), as well as the European Patent Convention, the Universal Copyright Convention and various other international conventions provide additional protection of intellectual property.


What immigration schemes are available for fintech businesses to recruit skilled staff from abroad? Are there any special regimes specific to the tech or financial sector?

Immigration to Liechtenstein is generally rather restricted. However, for EU and EEA nationals, it is easy to locate close to the Liechtenstein border in Switzerland, Austria or Germany. Additionally, a short-term permit in Liechtenstein can generally be granted for up to 12 months. There are also exceptions to this restrictive regime for highly skilled persons.

As the fintech area generally requires specialised knowledge, it follows that there is potential to have these work permits granted in order to promote the growth of fintech businesses within the country.

If a person is not able to achieve residency in Liechtenstein, they can seek residency in either Switzerland, Austria or Germany and then be granted a cross-border commuter card for the purposes of employment within the country. 

What immigration schemes are available for foreign investors and entrepreneurs wishing to invest in or establish a fintech business in your jurisdiction?

Liechtenstein is very open minded about establishing businesses within its borders. Therefore, registering a business within Liechtenstein is relatively easy. This is attested by the fact that the number of registered corporations within the country is comparable to the number of citizens. Therefore, in a sense, Liechtenstein could be considered the ‘Delaware of Europe’, ultimately creating a reputation based on the business-friendly nature of the country as opposed to its size.