Blockchain meets asset protection - Intax Group · Advantages of Blockchain-Technology 1. generates...

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Blockchain meets asset protection - new application in the Liechtenstein toolbox

1. Liechtenstein ‘Blockchain’-Law 2. Case study: blockchain solution for Russian real estate 3. Liechtenstein Foundation

Overview

1. Liechtenstein ‘Blockchain’-Law

LMG Lighthouse Trust reg. , © Dr. Alexander Lins

Blockchain – Hype or Revolution?


Advantages of Blockchain-Technology

1. generates a chain of information which is

• secure

• equipped with time signatures

• unforgeable

2. Blockchain and related technologies offer possibilities for the protection and “registration” of all kind of property

3. is used for evidence before courts

4. cost efficient usage to accelerate such processes

5. anonymity


Usage of Blockchain-Technology

• Payment: Crypto-currencies and funding (ICO)

• Equity rights: Shareholder voting rights, dividend, etc)

• Asset rights (token represents assets)

• Access to networks (‘utility token’)

• Smart Contracts

• Other usages of ‘Token-economy’


Abuse of Blockchain-Technology

Due to anonymity

• Token does not represent the promised real value

• Attraction for criminal minds (Money Laundering-tool)

apart from technical issues such as

• Loss of ‘private keys’

• …

-> Blockchain needs legal certainty!


Liechtenstein Blockchain Law

• Draft of law: in force probably Q1/2019

• other players (Malta, Singapore, Latvia, Gibraltar etc)

• ‘Crypto-Valley Zug’ (no legal framework, no services by CH-Banks)

• ‘First mover’ for a sophisticated Blockchain Law

Key features:

• integrated law (link to Property Law, Due Diligence Law etc)

• open for new technologies



Goals: Legal framework, that will

• provide protection for users

• prevent users from abuse

• procure legal certainty for the transfer of the ‘real’ world to the blockchain-system

• legal certainty as basis for the ‘token-economy’

• procure trust into quality of service-providers

• support the efficiency of ‘token-economy’

• provide legal certainty for the digital transfer of assets

• be open for new technologies



Contents I

• Definition of ‘Token’ as base for ‘Token Economy’

• neutral definition as ‘Trustworthy Technologies’ (name of Law: ‘TT-Law’) for new technological inventions

-> no rules regarding technology, because

technology fast moving

regulations would hamper innovation

openness innovation is important



Contents II

Legal definition of service providers:

• Token issuer: «A person who issues tokens in their own name or on a commercial basis in the name of third parties»

• Token generator: «A person who generates one or more tokens and makes them available via TT system»

• TT custodian: «A person who provides custody services for private keys to third parties within TT systems»

• Physical validator: «A person who ensures the enforcement of rights, embodied in tokens, over objects within the meaning of property law on TT systems »

• TT protector: «A person who holds tokens in TT systems in their own name but for a third party’s account » …

2. Case study: blockchain for Russian real estate


Case study: blockchain solution for Russian real estate

Trust LIE

OOO Co RUS

3. Liechtenstein Foundation


• assets brought in by Founder become legally independent (asset protection!)

• Foundation has no “members “ but “beneficiaries“ • enjoyment of foundations assets and/or income • New Liechtenstein Foundation law 2009 – gathering of 80 years of

Foundation-experience • most attractive in competition of Foundation law regimes • “systematically and substantively first-rate, indeed as pioneering”

Liechtenstein Foundation: Features


• Foundation arrangements lasting over generations as opposed to testamentary dispositions

• Monitoring of testamentary stipulations very difficult when heirs live in various countries or assets are spread over various jurisdictions

• last will of deceased can be deviated by heirs with unanimous vote (in many jurisdictions)

Liechtenstein Foundation – advantages:


• Foundations assets do not form Founders estate • the Foundation owns assets as legal entity • no probate proceedings on foundations assets after Founders death • big advantage when assets (bank accounts, real estate, etc) are

situated in different countries or the Founder has lived in different locations

• probate can be very time consuming and costly • beneficial interests are not part of beneficiary’s estate • successor beneficiaries become the Foundation’s new beneficiaries

Liechtenstein Foundation - advantages: no lenghty probate


• Foundation protects personal assets from unjustified interference by third parties

• Liechtenstein has NO Enforcement of Foreign Civil Judgment Treaty → legal action against a FL-Foundation must be brought before

Liechtenstein Courts → Liechtenstein Foundation = effective tool to protect Founder and beneficiaries against political turmoil in their home countries

Liechtenstein Foundation - advantages: asset protection


• ensurance to keep family assets together across generations • holding of companies shares according to family traditions • flexibility of any economic activity through subsidiaries • Without Foundation - assets of deceased will be divided amongst

heirs → Foundation as perfect tool to preserve family assets/family business

under steady management over decades

Liechtenstein Foundation - advantages: preservation of family assets


• LIE Foundation more than 80-year-old • many court decisions in Foundation Law → legal certainty • in addition Foundation Articles may provide arbitrational solution • Foundation Law and practice are well known by legal practitioners

(incl. courts and authorities) • LIE Foundation served as model for other (even common-law)

jurisdictions

Liechtenstein Foundation - advantages: decades of tradition of Foundation Law


Dr. Alexander Lins, LL.M.

LMG Lighthouse Trust reg. Austrasse 14 Postfach 254 9495 Triesen Fürstentum Liechtenstein

Tel.: + 423 239 92 21 Fax: + 423 239 92 30 [email protected] www.lmg.li

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