LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Valerio Scollo and Angela Permunian, GSK Stockmann
In addition, if a party facilitates the trading of security tokens or cryptocurrencies without any intermediary, MiCA shall not apply. 10.10 Regulation of Funds While there is no specific regulation targeting funds that invest in blockchain assets, according to the recently updated ESMA Q&As on the Alternative Investment Fund Managers Directive (AIFMD), manag - ers of an undertaking investing in crypto-assets may be subject to the directive if the relevant undertak - ing meets the definition of an alternative investment fund (AIF). Funds that raise capital from a number of investors to invest in crypto-assets in accordance with a defined investment policy for the benefit of those investors will qualify as an AIF in accordance with the AIFMD. Although the AIFMD does not provide a list of eligible or non-eligible assets, the CSSF has published FAQs on the possibility of investment funds investing in vir - tual assets. Pursuant to the position of the CSSF, an AIF may invest directly (and indirectly) in virtual assets if its units are marketed only to professional investors, and a Luxembourg authorised AIFM must obtain an authorisation from the CSSF for this investment strat- egy. Accordingly, the CSSF has indicated that UCITS and UCIs addressing non-professional customers and pension funds are not allowed to invest, directly or indirectly, in virtual assets (as defined in the AML Law). 10.11 Virtual Currencies In accordance with the AML Law, virtual currencies – ie, digital representations of value that are not issued or guaranteed by a central bank or a public authority, which are not necessarily attached to a legally estab - lished currency and do not possess a legal status of currency or money, but are accepted by persons as a means of exchange and which can be transferred, stored and traded digitally – are also considered to be virtual assets. Therefore, the relevant AML/CFT obligations also apply to virtual currencies (see 10.3 Classification of Blockchain Assets ). 10.12 NFTs There are currently no specific provisions relating to non-fungible tokens (NFTs) and NFT platforms in Lux - embourg. Unless NFTs are considered to be virtual
assets or financial instruments, they would not fall within the scope of existing financial services regula - tions. For example, guidance issued by the FATF out - lines that digital assets which are unique, rather than interchangeable, and which are used as collectibles rather than as payment or investment instruments, would generally not be considered as virtual assets. Nonetheless, whether or not NFTs could be used for payment or investment purposes and thus qualify as virtual assets should be assessed on a case-by-case basis. If an NFT qualifies as a virtual asset under the AML Law, specific registration and AML/CFT obliga - tions would apply (see 10.3 Classification of Block - chain Assets ). Moreover, NFTs are also excluded from the scope of MiCA, unless their de facto uses or fea - tures would qualify as crypto-assets under MiCA. 10.13 Stablecoins Luxembourg is one of the first EU member states to adopt legislation transposing MiCA into national law and to operationalise MiCA for token issuers. The gov - ernance framework for stablecoins set out in MiCA has been applicable since 30 June 2024 and empowers the CSSF to supervise issuers of stable-value crypto- assets. In practice, stablecoins are regulated as either: • EMTs, which maintain a stable value by reference to an official currency; or • ARTs, which aim at maintaining a stable value by reference to one or more assets, such as curren - cies, commodities or crypto-assets. Accordingly, MiCA imposes detailed requirements on issuers of ARTs and EMTs, including an obligation to file a White Paper and rules on reserve assets, govern - ance, redemption rights, own funds and disclosures. EMTs must be redeemable at their original value, on demand, in the reference currency. Redemption should not be subject to a fee unless specifically allowed by MiCA. EMT issuers must meet capital requirements, following existing banking or electronic money rules, depending on their type. ART issuers, on the other hand, follow the capital requirements set out in MiCA. ART holders have the right to redeem tokens at the fiat value of the underlying referenced assets, rather than at par value. Like EMT issuers, ART issuers must also
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