LCX Liechtenstein Blockchain Laws Framework 2024

The Cryptocurrency industry is growing by leaps and bounds, and there are certain rules, laws, and regulations that need to be followed to officially be part of this side of the economy. 

With an idea on paper and building a licensed blockchain ecosystem, LCX has come a long way, and the journey has been superlative. This year, also the founder of LCX, Monty C. M. Metzger has turned every stone to ensure that LCX is a regulated and fully compliant company. 

LCX (Cryptoassets Exchange in Liechtenstein) (LCX) believes that regulating the system will ultimately help avoid crypto frauds. Therefore, LCX is registered with the Financial Market Authority of Liechtenstein (FMA)  pursuant to the TVTG regulatory framework (Token and Trusted Technology Service Provider Act). Let’s deep dive into the details: 

TT EXCHANGE SERVICE PROVIDER

LCX is registered as a Trusted Technology exchange service provider, it exchanges legal tender like Swiss francs or Euros for Tokens and vice versa, as well as Tokens for others. 

Special internal control mechanisms

LCX, as a TT Exchange Service Provider, makes sure that appropriate internal control mechanisms are all set before beginning their activities to:

• make sure the disclosure of the similar market prices for the traded Tokens

• make sure the declaration of the sale and purchase prices for the traded Tokens

Reporting obligations

LCX, as a TT Exchange Service Provider, provides the FMA with every detail regarding business activities that is mandatory in order for the FMA to carry out their legal mandate. Additionally, LCX instantly informs the FMA of:

• any modification associated with the registration

• the discontinuation of business activities.

• the deletion from the Commercial Register

• the existence of another cause for cancellation in conformity with Article 20 of the TVTG

TT CUSTODIAN

LCX guards the tokens/crypto assets and  TT keys (e.g. private keys) for clients, for instance, to enhance the protection of clients from loss or mishandling of private keys. The tokens are safeguarded in the name of others or for the account of others. The TVTG expresses that the TT service provider, i.e., LCX, must make sure that tokens kept in custody are segregated from the corresponding users. 

Safeguarding requirements

The tokens and TT Keys kept in protective custody for a client, whether in the own name of the TT Key Custodian or the name of the client, are deemed separated third-party assets in the incident of enforcement or insolvency proceedings. Clients will be safeguarded from claims by the TT-Custodians’s other creditors.

Special internal control mechanisms

LCX, as a TT Custodian, makes sure that appropriate internal control mechanisms are all set prior to the start of activities for the purpose of:

• execute appropriate security standards to safeguard, in specific, the loss or mishandling of the TT Keys or tokens

• make sure to segregate custody of Tokens or keys of clients from the business assets of the TT Custodian

• ensure the correct allocation of Tokens of the clients

• implement the orders of the clients in line with the agreements
• Assessing and informing customers about risks related to sub-custody of crypto asset private keys or tokens by third parties.
• Ensuring operations continue smoothly during interruptions through Business Continuity Management.
• Continuously verifying the suitability of virtual asset systems (blockchain protocols) for their intended use.
• Evaluating and communicating to customers the risks of outsourcing critical custody services for crypto asset keys or tokens.

TT PRICE SERVICE PROVIDER 

LCX, as a TT Price Service Provider offers the TT system to the users with aggregated price details depending on sale and purchase offer or finished transaction. 

Special internal control mechanisms

LCX, as a TT Price Service Provider makes sure that appropriate internal control mechanisms are all ready before initiating their activities in the interest of:

• making sure that transparent prices are published

• make sure that there is no conflict of interest when determining prices.

• exchange details of related party transactions with the users concerned.

TOKEN ISSUER

LCX, as a token issuer, publicly provides the service of Token issuance in its ownname or on behalf of the client (Token Issuer pursuant to Art. 12 para. 1 TVTG).

Special internal control mechanisms

LCX, as a Token Issuer, makes sure that appropriate internal control mechanisms are all set prior to start activities for the purpose to:

• share legally required basic details at every time throughout Token Issuance 

• prevent abuse related to token recipients’ decision to disclose basic data

• perform Token Issuance in conformity with the TVTG

• maintain the offered services in the case of interruptions throughout the Token Issuance (business continuity management)

TT IDENTITY SERVICE PROVIDERS

LCX as a TT identifier identifies the person in ownership with the right to dispose of a token and record the right of disposal in a directory. This indicates that with the TT Identity Service Provider, the TT Identifier (e.g. public key) is registered and designated/allocated to the owner.

Special internal control mechanisms

LCX, as a TT Identity Service Provider, ensures that appropriate internal control mechanisms are all ready before initiating their activities in the interest of:

• make sure of the utilization of suitable measures that make it feasible to determine the identity of the person with the disposal right, and also guarantee:

• for representatives or persons of a legal person who are present physically, they are identified either depending on an official photo identification or other document of identical trustworthiness.

• for legal persons or  person who are not present physically, other identification ways must be executed that allows identification similar to a)

TOKEN GENERATOR 

LCX as a token generator establishes the technical rules for how Tokens function, which communications are feasible and, in specific, under what situations Tokens can be transmissible.

Special internal control mechanisms

LCX, as a Token Generator makes sure that appropriate internal control mechanisms are all ready prior to commence actions in order to:

• make sure that the proper representation of the rights in the Token is done during the Token’s lifetime;
• make sure that disposal of a Token straight leads to transferral of the rights represented by the Token.
• ensure that double-spending of the right represented by the token is precluded under both the relevant legislation and the rules of the TT system.

LCX has gathered all these registrations and become one of the world’s most trusted and valued fintech companies. 

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