Now that things have started to calm down in the cryptocurrency market, after the dreadful crypto winter of 2022 and all the terrible events stemming from it, the public’s attention has gone back to an issue that has made the topic of debate for many years now: mainstream crypto adoption. As expected, there are those who say that it’s very much possible for crypto to gain universal acceptance at some point in the future and those who believe that digital currencies have already peaked and there’s nowhere to go but down.
The fact that crypto trading volume on exchange platforms like Binance has surged recently proves that people continue to buy Bitcoin and other popular coins, but is this enough to drive widespread adoption? Regardless of predictions and speculations, digital currencies seem to be moving further away from their status as a fringe asset and getting closer to the mainstream. And now that Lichtenstein is planning to accept Bitcoin payments for state services, it’s more obvious than ever that cryptocurrencies are here to stay.
Another leap forward for crypto
According to local news outlets, in an interview given on 7Th May, Lichtenstein’s Prime Minister Daniel Risch talked about accepting Bitcoin as a form of payment for various public services. Not much is known about what the implementation process will entail, as the PM, who has also been appointed as Finance Minister, did not provide details on when this plan might be put into motion or what services could qualify for Bitcoin payments. It’s also not yet clear if the local lawmakers intend to take things further and declare Bitcoin a legal tender like El Salvador and the Central African Republic did recently.
What we do know is that authorities will have the possibility to convert the Bitcoin deposits they receive into their national currency, Swiss francs. This is the most probable course of action since converting crypto into fiat money can help avoid risks associated with crypto’s high volatility. Risch also mentioned that at the moment Bitcoin and other similar assets are still too volatile to be considered a viable option for the country’s treasury, although the situation could change in the future.
The small principality is known for having a positive attitude towards Bitcoin and other digital assets, as proved by the crypto-friendly policies it has implemented over the years. In 2019, Lichtenstein became one of the first countries to introduce dedicated crypto regulations after the Parliament approved the Token and Trusted Technology Service Provider Act, shortly known as the Blockchain Act, which entered into effect in 2020. The Act establishes clear guidelines and regulations for blockchain and digital currencies and maximizes consumer protection
What’s more, in 2022 LGT Bank, the largest private bank in the country owned by the Princely Family of Liechtenstein, has also entered the crypto ecosystem after it struck a deal with SEBA Bank, a Swiss-based bank that provides crypto banking and investment services, in order to facilitate crypto investments for its customers. Similarly, Liechtenstein’s VP bank has joined forces with Meatco, a leading provider of digital asset technology infrastructure, to support the expansion of its digital asset custody and tokenization services.
Therefore, the Government’s decision to enable Bitcoin payments for public services falls in line with Lichtenstein’s progressive stance on financial matters and its longstanding efforts to establish itself as a crypto-friendly country. The initiative provides several benefits for citizens and the government alike. Without the implication of third parties like banks, people will be able to enjoy greater convenience and faster transactions when paying for public services. On top of that, this will also lower transaction fees which can lead to substantial savings.
It’s also worth pointing out that since Lichtenstein passed the Blockchain Act, an increasing number of crypto companies have set up shop in the country. Now that the European Union is in the final stages of creating a regulatory framework for digital currencies known as the Markets in Crypto Assets (MiCA), crypto providers will have one more reason to settle in the region. Although Lichtenstein is not part of the EU, the MiCA regulations could apply to all the countries in the European Economic Area, including Liechtenstein.
Mass adoption in the works in European countries
Lichtenstein is not the only country that is ramping up efforts to embrace digital currencies. Other regions in Europe are also paving the path for greater crypto adoption. Swiss communities Zug and Lugano provide a relevant example in this respect. In both regions, Bitcoin payments are already accepted for certain taxes and state services. In fact, in Lugano, even independent businesses such as Mcdonald’s have jumped on the crypto bandwagon enabling Bitcoin payments for their customers.
It seems like crypto holds more appeal for smaller nations, so countries like Liechtenstein are more inclined to embrace digital currencies than larger countries. It’s also obvious that the crypto banking and investment market is expanding rapidly all over the world, and European countries have taken notice of this trend. This has prompted many governments across the Old Continent to take action in this respect by adapting their financial systems to accommodate the rising demand for crypto products and services.
However, one can’t ignore the challenges that these types of initiatives imply. The volatility of digital currencies remains a huge issue that governments have yet to address. Besides, the integration of crypto assets into the traditional financial system also requires the development of special security measures that can protect against the risk of fraud and money laundering.
The race to mass crypto adoption continues, even though it’s difficult to say if digital currencies will ever cross the finish line. Countries like Liechtenstein that promote an open attitude towards crypto through the measures they embrace could encourage other nations to follow in their footsteps. If the trend continues, crypto stands a real chance to achieve mainstream acceptance in the near future.
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