LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Valerio Scollo and Angela Permunian, GSK Stockmann
on the financial sector and extends direct oversight to ICT third-party providers, including major cloud and tech platforms. In recent months, the European Parliament and Coun - cil reached an agreement on the Payment Services Regulation (PSR) and the Third Payment Services Directive (PSD3) to strengthen fraud prevention on online platforms across the EU and reduce market barriers for open banking providers. The PSR and PSD3 will, among other things, apply to transfers of e-money tokens used for payment. The PSR and PSD3 are expected to be adopted in early 2026. Lastly, the European Commission published a pro - posal for the EU Financial Data Access Regulation (FiDA), which is expected to come into effect in 2027 and is aimed at enhancing digital transformation in the financial sector through the development of open finance. In May 2025, the Luxembourg government launched “Accelerating Digital Sovereignty 2030”, a unified national strategy for data, AI and quantum technolo - gies as three main priorities. This demonstrates the government’s commitment to integrating advanced technologies and keeping pace with the rapidly grow - ing fintech industry. There are a variety of different types of fintech compa - nies in Luxembourg, including payments, big data and AI, insurtech, cybersecurity and authentication, fund - tech, regtech, lending and blockchain. Especially in the e-payment and e-commerce sectors, Luxembourg is the home to leading industry players such as Ama - zon, PayPal, Airbnb and Rakuten, which are licensed and supervised by the Financial Sector Supervisory Commission ( Commission de Surveillance du Secteur Financier or CSSF) as banks, payment service insti - tutions, e-money institutions or virtual asset service providers, as the case may be. 2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models
Furthermore, a significant number of fintech com - panies in Luxembourg provide services for the com - pliance and regulatory needs of the financial sector. These services range from KYC obligations, data management and fraud detection to fund reporting, digital investment services and investor information tools. Luxembourg-based fintechs, such as Funds - DLT and Tokeny, are also active in the development of blockchain-based market infrastructures. While traditional players in the financial industry, including banks and insurance companies, were ini - tially viewed as competitors to fintech companies, today there is a notable shift towards collaboration between these entities in Luxembourg. By way of example, following EU legislative developments on payment services, several Luxembourg retail banks formed a leading European open banking platform, LUXHUB, in 2018. 2.2 Regulatory Regime The regulatory regime applicable to fintech players depends on the business model and activities of the company. • Payment and electronic money institutions – enti - ties providing payment or electronic money ser - vices are subject to the Law of 10 November 2009 on payment services, as amended (the “Payment Services Law”), and accordingly are subject to authorisation by the CSSF. • Insurtech – entities providing insurance services are subject to the Law of 7 December 2015 on the insurance sector, as amended, and accordingly are subject to authorisation by the Insurance Commis - sioner ( Commissariat aux Assurances or CAA). • Fundtech – entities that operate as investment funds or investment fund managers may be subject to several regulations, including the Luxembourg Law of 12 July 2013 on alternative investment fund managers, the Law of 17 December 2010 on undertakings for collective investment, the Law of 13 February 2007 on specialised investment funds and the Law of 23 July 2016 on reserved alterna - tive investment funds, each as amended. Funds and fund managers are typically authorised by the CSSF.
515 CHAMBERS.COM
Powered by FlippingBook