Initial Coin Offering & Blockchain Technology: Liechtenstein’s Unique Advantages as a Location
Thomas Nägele, founder of NÄGELE Attorneys at Law LLC, has over 10 years programming experience and, in addition to IT law, specializes in legal matters most relevant to businesses. It’s in this vein that Nägele shared his perspectives with us in an interview.
Welcome, Mr. Nägele, and thank you for taking the time to speak with us. Since you have, among other things, specialized in consulting with start-ups, what, in your opinion, are Liechtenstein’s most significant advantages as a location for establishing and continuing to grow a business?
For one thing, we have entry to the Swiss market and all of its features and advantages. What’s more, we’re a part of the EEA and so have access to the EU. Apart from that, Liechtenstein has an outstanding financial center. Again, all paths here are short, meaning that efficiency and speed – for example, in founding a company – have distinct advantage. Another advantage: the flexible and at times unique structures of communities such as the LVC or the Institute. On top of that, as a new business you’ll find diverse, solutions-oriented institutions willing to help here in Liechtenstein – organizations that will assist you with personally tailored advice.
At what stages do you support new businesses?
In general, we begin right with planning and founding, including aspects such as clarifying trademark issues, requesting a trade license, and structuring employment or software contracts. We usually assist start-ups in the blockchain industry in matters of supervisory law.
For what business segments is Liechtenstein particularly well suited?
Definitely for any business model in the financial sector. This country has well trained specialists with deep experience and a mindset geared toward innovation. Another promising market here is technology development – you’ll find a prominent example in the genesis of Hilti. Accordingly, it’s the combination of technology and finance along the lines of a FinTech that’s of course ideal. Here we can hardly be more robust than we already are.
One of your specialized areas of focus is IT law, particularly regarding the themes of blockchain and distributed ledger technologies. When did you become involved with these technologies?
In 2011 I found myself entering this particular area and I’ve been involved with them intensively since. My doctoral thesis, which I wrote while working as a lawyer, is dedicated to the legal nature of tokens.
What advantages can businesses in the area of bitcoin/blockchain technology profit from as investors in Liechtenstein? Put another way, why is this location better for founding new businesses?
One particularly beneficial aspect we offer in comparison to other jurisdictions is the relatively high legal security. There are a lot of questions that accompany a new phenomenon like blockchain, and these can be addressed to the seasoned experts – and there are many here, compared to other locations – directly, face-to-face. That means that questions about, say, authorization requirements can be taken up directly with regulators. What’s more, new projects, including ones within a regulatory framework, can be initiated. Here you can position your FinTech idea and guide its implementation, working together with the offices responsible. In short, this location fundamentally has the aspects of “openness,” “flexibility,” and “know-how” going for it.
To what extent are you involved with the area of initial coin offerings?
It’s our bread-and-butter. It’s a daily challenge to oversee and classify the sheer number of incoming project requests. But it’s also a lot of fun to analyze the various business models and accompany them through the legal realm. Their idiosyncrasies aren’t easy to wrangle – there’s no recipe for these patents. From charitable projects, such as work in Africa to introduce banking services for those social classes that have historically been excluded from these types of transactions, to profit-oriented projects, such as new models of insurance – there’s a lot here. In general, I encounter visionaries every day, people who want to innovate and who can. I’m profoundly impressed and fascinated by it.
What advantages does ICO offer for startups?
First off, an ICO is significantly more efficient than an IPO, than the standard flotation. It means that you don’t have to surrender any proportion of or legal rights to your business and you can generate high capital sums, even in the range of millions, within a short period of time, sometimes within just a few weeks. Above and beyond that it offers investors a simplified entry point and avoids complicated control procedures for all involved. In my opinion, though, it’s important to recognize the risks; that goes hand-in-hand with every new technology, blockchain included.
What makes Liechtenstein special for ICOs?
Certain things used to seem possible only in Silicon Valley. Now they’re also a reality in Liechtenstein. With ICOs, start ups are now amassing cryptocurrencies worth millions of dollars. Liechtenstein has experienced financial intermediaries who are accomplished in dealing with large fortunes – that’s a big advantage. Another asset in Liechtenstein is the banks. We’re one of the only jurisdictions with banks that offer accounts for start-ups in this area. In addition there’s the relative legal security in these matters, which I mentioned before, and a solid structure for new and growing businesses.
Generally, the topic of ICOs is very current in Liechtenstein. The University of Liechtenstein takes up the theme of initial coin offerings and the Technopark regularly organizes courses and event on the topics of cryptocurrencies and blockchain technology. This brings a lot of publicity to the area. The start-up community in Liechtenstein is growing rapidly and reliably and, with it, the interest in ICOs. Anyone interested can also look up the Cryptocountry Association (cryptocountry.li), which serves as an information clearinghouse for its members.
Thank you for speaking with us today and sharing your insights.
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