LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Valerio Scollo and Angela Permunian, GSK Stockmann
In addition, depending on the nature of the financial instrument, the issuer may be subject to: • the Prospectus Regulation; • the Law of 11 January 2008 on transparency requirements for issuers; • the AML Law; • MAR; • the MiFID II framework, among others; and/or • MiCA. Luxembourg has established itself as a leading Euro - pean hub for the tokenisation of digital assets, trans - posing MiCA and adopting a set of Blockchain Laws. However, market participants continue to face regula - tory uncertainties, practical difficulties in implementa - tion, and a lack of industry standards and governance frameworks. Furthermore, concerns such as limited liquidity and the complexities of cross-border issu - ance still hinder the full potential of tokenised assets in Luxembourg. 10.5 Regulation of Blockchain Asset Trading Platforms The regulation of blockchain asset trading platforms depends on the regulatory status of the assets traded on the platform. For blockchain assets that do not qualify as financial instruments under the MiFID II framework, the relevant trading platforms are now subject to the regulatory requirements set out in MiCA, which fully took effect on 30 December 2024. If the blockchain assets qualify as financial instru - ments under the MiFID II framework, the trading ven - ues would also fall within the scope of the MiFID II rules on trading venues. In January 2024, ESMA pub - lished a consultation paper outlining an operational roadmap to determine when a crypto-asset falls under MiFID II and therefore when a trading platform should be classified as a regulated market, MTF or OTF. The currently applicable EU regulatory framework requires the transfer of any such instrument to be settled through central securities depositories (CSDs) in accordance with Regulation (EU) No 909/2014 on central securities depositories, as amended (CSDR); accordingly, DLT financial instruments cannot current - ly be admitted to trading on a regulated market, MTF
or OTF. However, in view of encouraging technologi - cal innovation in the area of settlement, the DLT Pilot Regime provides a possibility for MTFs and CSDs to be exempt from certain provisions of the CSDR. 10.6 Staking The provision of staking services relating to cryptocur - rencies is neither addressed nor prohibited by MiCA. Nevertheless, the provisions of MiCA would apply in the event that a staking service provider holds cryp - to-assets in custody. If staking services are offered alongside other crypto-asset services, the CASP must obtain consent from the client before staking their crypto-assets. 10.7 Crypto-Related Lending The lending and borrowing services related to crypto- assets are not addressed by MiCA; however, these activities are still subject to regulatory oversight, in particular for compliance with AML/CFT standards. Furthermore, licensing may be required depending on the nature of services offered, such as collateralised loans or the use of fiat currencies. 10.8 Cryptocurrency Derivatives MiCA does not directly address cryptocurrency deriv - atives. However, derivatives that qualify as financial instruments with crypto-assets as their underlying asset are regulated under MiFID II. Since cryptocur - rency is classified as a crypto-asset, these financial instruments fall under the regulation of MiFID II. Addi - tionally, cryptocurrency derivatives are subject to MAR if they are traded on regulated markets, MTFs or OTFs. 10.9 Decentralised Finance (DeFi) There are no specific regulations governing DeFi in Luxembourg. Since DeFi includes a broad range of financial services, it should be assessed on a case- by-case basis whether a certain activity or product would fall within the scope of existing financial ser - vices regulation. At European level, MiCA failed to directly address DeFi. Nevertheless, ESMA is actively monitoring DeFi developments and co-operating with international organisations such as the Internal Organ - isation of Securities Commissions and the Financial Stability Board.
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