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NFT and Blockchain Hub Austria: Austria as an Attractive Location for Innovation

Innovation-friendliness in Austria

An increasing number of companies have recognised the advantages of the blockchain technology and developed suitable business models. Companies operating in the fields of blockchain, crypto assets or financial technology (FinTech) have by no means always had it easy. Innovative, and, in theory, promising business ideas are frequently suffocated in practice by administrative obstacles during the startup phase. In contrast, Austria ranks among the most innovation-friendly countries in Europe with respect to eGovernment. Here great emphasis is put on digitalisation, which is promoted in many ways. Furthermore, Austria ranks among the best along with the Baltic States, and repeatedly demonstrates that it is very open to the blockchain technology.

Future-oriented representation of interests

In its role as the legally stipulated lobby, the Austrian Federal Economic Chamber plays an important role for companies operating in Austria, because it significantly helps to shape economic conditions and represents the commercial interests of its members. Recent years have shown that the Federal Economic Chamber is forward-looking and thinks in a future-oriented manner, for example, in cooperation with the Blockchain Working Group of AUSTRIAPRO, an association with the mission to promote standards-based e-business solutions. The Blockchain Working Group focuses on applications, uses and risks related to the issue of blockchain in different business segments. A separate blockchain test lab was also set up in which potential business models can be safely put to the test.
Moreover, the Federal Economic Chamber operates the "Austrian Public Service Blockchain" (APSBC) together with other public administrative bodies, enabling data to be certified at no cost. The Blockchain Data Certification Service is available to Federal Economic Chamber members free of charge. At the same time, the association AUSTRIAPRO is working together with the Austrian Blockchain Center to develop a blockchain infrastructure for the private sector.

Regulatory sandboy as a real-life laboratory

A business location advantage which should not be underestimated is the openness of Austria's Financial Market Authority (FMA) to innovative business models. Other regulatory authorities sometimes tend to emphasise over-regulation, whereas the FMA is striving to find a healthy balance between market security and future perspectives. New, innovative ideas, especially in the fields of FinTech and blockchain, ultimately imply many legal issues. One of them is whether a business model is subject to the supervision by the FMA and whether a licensing obligation exists. Since 10 January 2020, service providers in Europe involved with virtual currencies are required to register with the responsible national authority. The regulations imposed on an EU level impact businesspeople who offer the commercial purchase and sale of virtual currencies (e.g., crypto exchanges), amongst others.

In order to promote Austria as a business location as well as FinTech business models under development, the so-called Regulatory Sandbox was legally established in 2020 within the auspices of the FMA, and the first participants were accepted in the following year. The rush to take advantage of this is still quite limited at present. Nevertheless, these regulatory sandboxes serve as real-life laboratories serving as an experimental space enabling innovative technologies, products and services to be tested for a specified period of time and in a controlled environment. The underlying objective of such real-life laboratories is to promote innovative dynamism in light of the fact that legal obstacles can be temporarily removed, and insights can also be gained for future (de-)regulation.

Triumphal march of the Viennese unicorn

Austria boasts a large number of successful companies. Without doubt, the biggest (Austrian) success story in the 21st century is that of the crypto/FinTech company Bitpanda GmbH, which operates the Bitpanda Global Exchange as an exchange and trading platform, amongst other activities. This makes it possible to trade cryptocurrencies, precious metals, shares and much more. First founded in the year 2014, the value of the company is already estimated to have surpassed USD 4 billion in mid-2021. Bitpanda has maintained its headquarters in the heart of Vienna up until now. The success story of Bitpanda and the head offices of many other companies in the sector such as Coinfinity and Kurant provide (further) proof that the development of crypto/Fintech companies in Austria is possible and that the business environment is a favourable one, conducive for the successful implementation of a business idea.

The Vienna Stock Exchange identified the potential of crypto and blockchain-related products at an early state, as its product portfolio shows. In September 2020, the Vienna Stock Exchange already listed products in bitcoin and Ethereum and was among the global trailblazers in this regard. In the meantime, the Vienna Stock Exchange offers a total of thirteen Exchange Traded Products (ETPs) from nine different issuers involved in the crypto business (as of March 2022).
The project of the Austrian Gallery Belvedere shows that there is no letting up with respect to new developments. One example is non-fungible tokens (NFTs), which began their ascent in the crypto landscape in the year 2021. Belvedere "dismantled" The Kiss, the famous work of art made by Gustav Klimt, into 10,000 digital sections and offered them for sale as NFTs. Works created by the artist Egon Schiele will experience the same fate, but with the difference that it will not simply involve parts of these masterpieces. The Leopold Museum in Vienna plans to sell 24 of Schiele's works of art as NFTs.

Outlook

The prevailing positive attitude towards crypto assets and blockchain technology in this country make Austria attractive as a business location for setting up firms operating in these areas. The possibilities for Fintech and crypto companies in Austria have not at all diminished over the years. In particular, public-sector interest in blockchain and promoting innovative ideas has been clearly perceptible, for example as evidenced by the founding of a Regulatory Sandbox by the FMA. It seems probable that further such "projects" will be initiated in the future in order to promote the innovative strength and thus the business location as well. Austria is and remains well-prepared for the future: blockchain rules!

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About the law firm Stadler Völkel Rechtanwälte:

About the law firm Stadler Völkel Rechtanwälte:
Stadler Völkel Rechtsanwälte is a commercial law firm in the heart of Vienna which decided to focus on consulting in the fields of blockchain, crypto assets and NFT at an early stage. In the year 2017, the law firm supported the first Initial Coin Offering (capital raising based on the issuing of new cryptocurrencies) in accordance with Austrian regulations. In the following year it successfully advised on the approval of a capital market prospectus by the FMA for the public offering of securities issued on the basis of the blockchain technology, which was a novelty in the European Union up until that time. Recently the law firm was designated as "the top name in Austria when it comes to crypto-related issues" in the 2022 ranking of law firms compiled by the business magazine "Trend". The two founding partners Oliver Völkel (1st place) and Arthur Stadler (2nd place) were rated among the top specialists in the crypto business by their fellow lawyers. More information is available at www.sv.law

 Article originally published in German.

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Arthur Stadler und Christopher Falke

STADLER VÖLKEL Rechtsanwälte - Attorneys at Law
+43 (1) 997 10 25
MEDIA@sv.law

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