LUXEMBOURG Trends and Developments Contributed by: Álvaro Garrido Mesa and Agustina Torino Martínez, Legal Node
Leading Luxembourg legal practitioners in the field agree that Luxembourg law also supports tokenisa - tion of instruments in registered form, despite no spe - cific references in the law, given that corporate rules do not explicitly prescribe the technology or medium where securities may be issued or maintained, and a DLT-based register could arguably be adapted to meet the necessary legal requirements without the need for dematerialisation. The Consolidation of CASPs 2026 marks a decisive phase for CASPs, as the mar - ket transitions from transitional operating regimes to a fully consolidated MiCA environment. While MiCA entered into application in stages during 2024 and 2025, 2026 is characterised by the expiry – or immi - nent expiry – of national transitional arrangements for pre-existing providers, resulting in a homogenised regulatory and competitive landscape. In practice, this means that CASP authorisation becomes a strict condition for continued market par - ticipation. Providers that previously relied on national grandfathering regimes or operated under legacy regulatory frameworks, such as the Luxembourg vir - tual asset service provider (VASP) regime established under the Luxembourg AML Law of 12 November 2004, are required either to complete the CASP authorisation process with the relevant national com - petent authority or to discontinue their operations. This dynamic contributes directly to consolidation throughout the EU, as market activity increasingly concentrates around authorised entities capable of meeting ongoing governance, capital, safeguarding and operational requirements on a sustained basis. As of the date of writing, there are 12 VASPs authorised in Luxembourg, some of which have already obtained authorisation as a CASP; others must endeavour to obtain that authorisation if they intend to stay in the race for the digitalisation of finance. For authorised CASPs, 2026 will revolve around navigating the continuous supervisory scrutiny. The Luxembourg financial regulator’s compliance expec - tations increasingly focus on substance, capital structure, internal controls and the effective imple -
mentation of policies and procedures, rather than on formal documentation alone. Governance, outsourc - ing arrangements, safeguarding of client assets and management of conflicts are being closely monitored, particularly where CASPs operate cross-border or in connection with institutional counterparties. At the same time, 2026 is marked by increased selec - tivity among clients, counterparties and partners. As operational resilience requirements under DORA and enhanced transparency obligations under DAC8 pro - gressively take shape at EU level (pending national transposition in certain member states, including Luxemburg), authorised CASPs are expected to demonstrate not only regulatory compliance but also operational robustness, governance maturity and data integrity. This reinforces competitive differentiation in favour of providers capable of operating at institu - tional scale. 2026 Trends and Developments Three trends are particularly relevant: • the standardisation of real-world asset tokenisation as an institutional product category; • the accelerated convergence of blockchain infra - structure with traditional financial market opera - tions; and • the elevation of non-financial requirements to baseline conditions for scalable deployment. Firstly, the tokenisation of real-world assets (RWAs) has, by the end of 2025, become an institutional prac - tice rather than a marginal fundraising method. The market narrative is no longer centred on “the future of tokenisation” but on the current market practice to attract investment, generate yield, improve balance- sheet efficiency and reduce operational friction. The development of tokenised treasury-style products is emblematic: along with Luxembourg’s issuance of digital treasury certificates (as described above), BlackRock’s tokenised money market fund BUIDL and Franklin Templeton’s tokenised money market and UCITS initiatives have demonstrated that tokenised cash management products can be structured as via - ble institutional instruments, with credible distribution, governance and operational control frameworks.
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