Innovating on the Blockchain: Security Token Offerings in Austria vs. Liechtenstein

On Tuesday, August 26, the Club Alpbach Liechtenstein hosted a well-attended Fireside Chat with the Director of the Office for Financial Centre Innovation, Dr. Thomas Dünser, and the President of the Digital Assets Association of Austria, Chris Miess. The topic was the blockchain and cryptocurrency market in Liechtenstein and Austria and current trends in the blockchain technology include security tokenization, cryptocurrencies like Bitcoin, and corporations issuing new forms of money like Facebook’s Libra. Crypto Fund Manager, Forbes 30 Under 30 recipient and this year’s scholarship holder of the Club Alpbach Liechtenstein, Demelza Hays, moderated the talk.

The discussion began with a brief introduction of how Mr. Miess came to the crypto space. After leaving Goldman Sachs, he joined a cryptocurrency company called TenX with Dr. Julian Hosp in Singapore. They sold their cryptocurrency in an initial coin offering (ICO) in Signapore and raised approximately $80 million. After leaving the company, Mr. Miess is now working on blockchain regulation in Austria. He mentioned although Harold Maura is no longer spearheading the blockchain regulation, Margarete Schramböck, Austria’s Federal Minister for Digital and Economic Affairs, is now very involved.

Dr. Dünser who was previously at VP Bank in Vaduz works in the Office of Prime Minister in Liechtenstein on the Blockchain Gesetz that is being passed now. His new role is to oversee the creation of Liechtenstein regulation for security exchanges. There are four levels of the licensing process, and the highest-level needs new regulation to be created before an official security token exchange can be up and running in Liechtenstein.

Dr. Dünser mentioned that several security token offerings have already been approved in Liechtenstein; however, Mr. Miess mentioned that none of the security token exchanges do not have sufficient liquidity when measured using daily trading volume.

Ms. Hays explained how security laws began in the first place – first with the US Securities Exchange Act of 1933 and then with the Howey Test in 1946. Ms. Hays prompts all of us to ask ourselves if our security laws and the cost of complying with security laws make sense in the digital age. She cites SEC commissioner Hestor Pierce as a reference for regulators that want to reconsider how to regulate security token offerings in a way that encourages innovation and simultaneously help protect against bad actors.

Another question regarding the use of blockchains in government services was asked by an audience member: Can blockchains achieve social impact and not only financial impact? The answer: The verdict is still out.

The main obstacle: We have not figured out how to build a blockchain that can verify if real-world data is true. Various companies are trying to build oracles that can work with smart contracts in order to overcome some of the problems associated with first generation blockchains. We might see at next year’s Forum Alpbach how advanced Europe’s entrepreneurs will be with a solution.

Demelza Hays, scholarship holder 2019