LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Valerio Scollo and Angela Permunian, GSK Stockmann
GSK Stockmann 44 Avenue John F. Kennedy L-1855 Luxembourg Tel: +352 27 18 02 00 Fax: +352 27 18 02 11 Email: luxembourg@gsk-lux.com Web: www.gsk-lux.com
1. Fintech Market 1.1 Evolution of the Fintech Market Luxembourg is a major European banking and wealth management centre. As a recognised EU hub for fintech companies, banks, asset man - agers and insurance companies, Luxembourg has a highly developed financial services eco - system. Since 2007, when the fintech pioneer PayPal received a full banking licence in Lux - embourg, the country has seen robust growth over the past few years and has now become a home for over 200 fintechs. In particular, Brexit has led to an increase of UK companies engag - ing in fintech activities in Luxembourg to access the European market and benefit from EU pass - port authorisation. A recent executive order from the US President prohibiting US federal agencies from undertaking any action to establish, issue, or promote Central Bank Digital Currencies (CBDCs) in the US and abroad may slow down international projects to develop CBDCs, includ - ing in the Eurozone, in favour of stablecoins. Impact of Legislative Developments Luxembourg’s economy heavily relies on finan - cial services, which account for around a quarter of the country’s economic activity. As a result, developing effective financial regulations is a key policy concern for the Luxembourg legislature.
The newly published Blockchain IV Law, which entered into force on 31 December 2024 inte - grates and formalises the use of blockchain technology, specifically DLT, in the manage - ment of dematerialised securities, both debt and equity. At the EU level, the European legislature has made efforts to regulate various aspects of fin - tech. To ensure consistency and clarity in the regulatory framework across Europe, the Euro - pean Commission introduced the Digital Finance Package in September 2020. This package includes several regulations, three of which have already been adopted: a pilot regime for market infrastructures based on DLT (see 2.5 Regula- tory Sandbox ), a regulation focused on digital operational resilience (see 2.11 Implications of Additional, Non-Financial Services Regula - tions ) and a regulation on markets in crypto- assets (see 10. Blockchain ). In addition, the European Artificial Intelligence Act (AI Act), which came into force in August 2024, provides a legal framework aimed at man - aging and mitigating the risks associated with AI, in particular, to protect human rights, safeguard sustainability, and encourage investment to promote AI innovation across Europe. The new anti-money laundering (AML) directive includes
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