Security Token Offerings (STO) in Liechtenstein – legal services

What an STO and a tokenised bond are

A security token offering (STO) is a method of raising capital from investors by issuing blockchain tokens that are linked to rights of the kind usually associated with securities. Typical examples are a claim to recurring payments such as interest or dividends, or voting rights. Unlike a utility token, which is meant to give access to a product or service, or a payment token used as a means of payment, a security token is assessed under securities and prospectus law.

Companies can issue equity instruments (for example shares), debt instruments (for example bonds) or hybrid products in tokenised form. A tokenised bond (tokenised debt security / tokenisierte Schuldverschreibung) is a debt instrument whose rights are represented by a token on a distributed ledger rather than by a traditional certificate. The holder generally has a claim against the issuer for repayment and interest, on the terms of the bond conditions.

Liechtenstein has been used as a place of issue for tokenised instruments. The legal questions are the same as for a conventional securities offering, with additional technology and registration issues under the Token and VT Service Provider Act (TVTG). SCHEIBER LAW advises issuers on these questions from its office in Vaduz. Related background is set out on the overview page Blockchain and more and, in German, on Blockchain & mehr.

An STO is not the same as an initial coin offering (ICO) in the broad sense. Common usage treats ICO as an umbrella for several token types, including utility and payment tokens. An STO is the subset in which the token is a security. That distinction determines which prospectus, registration and conduct rules apply.

Legal framework: TVTG and prospectus obligations

Two layers of Liechtenstein and EEA law typically matter for an STO.

Securities and prospectus law. Where transferable securities are offered to the public in the European Economic Area, a prospectus must in principle be drawn up under the EU Prospectus Regulation (Regulation (EU) 2017/1129), which applies in Liechtenstein. The Financial Market Authority Liechtenstein (FMA) is the competent authority for examining and approving prospectuses. The Regulation also provides exemptions, for example offerings addressed solely to qualified investors, offerings to fewer than 150 persons per EEA member state other than qualified investors, or offerings below certain total-consideration thresholds. Whether an exemption applies is a legal assessment of the concrete offer, not a marketing choice.

Where a prospectus is required, it must meet the content, format and approval rules of the Regulation. For eligible issuers the Regulation provides an EU Growth Prospectus with a standardised presentation. Approval of a prospectus is a decision of the FMA on that document; it is not an endorsement of the investment.

TVTG (Token- und VT-Dienstleistergesetz). Liechtenstein’s Token and VT Service Provider Act governs tokens and service providers for trustworthy technologies (VT). It requires certain VT service providers to register with the FMA and to prepare basic information (Basisinformationen) on the token. Which activities of an issuer, a token generator, a key-depositary or another intermediary fall under the TVTG depends on the services actually provided. The TVTG sits alongside, and does not replace, prospectus law: a token can be a VT under the TVTG and a transferable security under the Prospectus Regulation at the same time.

Other rules may apply depending on the business model, including banking, e-money, payment-services or fund regulation, and due-diligence duties under the Due Diligence Act (SPG). Those questions are examined on the facts of the project. This page describes the framework; it is not a complete list of every statute that might apply.

Process: typical legal steps

The sequence below is a working outline. Individual projects omit, combine or add steps. No timeline is promised.

1. Classification. Determine whether the token is a security, another form of financial instrument, a utility or payment token, or a combination. This drives prospectus, TVTG and any other licensing analysis.
2. Issuer and offering structure. Identify the issuing entity, the rights attached to the token, the target investors, the member states of the offer, and whether the offer is public or limited to qualified investors.
3. Prospectus analysis. Assess whether a prospectus is required or an exemption is available. If a prospectus is required, prepare the document for FMA review in the form that fits the issuer (including, where eligible, an EU Growth Prospectus).
4. TVTG and supervisory questions. Assess whether VT services are provided, whether registration is required, and which basic information must be prepared.
5. Documentation. Bond conditions or token terms, subscription documents, and the information documents required by prospectus law and, where applicable, the TVTG.
6. Coordination. Align legal work with the issuer’s other advisers (technical, tax, audit) before the offer opens. After issuance, ongoing disclosure and registration duties are a separate matter and are scoped if needed.

Which steps are required, and in which order, depends on the token, the issuer and the offer. The firm discusses the sequence with you before work begins.

What SCHEIBER LAW handles

Dr Florian Scheiber, attorney-at-law in Vaduz, advises on security token offerings and tokenised bonds. The services offered in this field, as described on the firm’s blockchain pages, include:

• advice on security token offerings (STO) and, where relevant, initial coin offerings (ICO);
• legal classification of the token and the offering structure;
• preparation of legal opinions;
• preparation of the securities prospectus in accordance with the EU Prospectus Regulation;
• preparation of the basic information pursuant to the TVTG;
• questions of registration of VT service providers under the TVTG.

The firm has advised on tokenised instruments in Liechtenstein, including the preparation of securities prospectuses for tokenised bonds. Published notes on individual offerings remain in the news archive. Those notes describe the situation at the time of publication; they are not a current list of mandates and do not indicate a particular outcome for a new project.

The scope of a mandate is agreed in writing. Neighbouring topics — FinTech licensing, compliance measures, and capital-markets work more generally — are handled separately where they arise. This page does not replace advice in the individual case.