LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Valerio Scollo and Angela Permunian, GSK Stockmann
10.3 Classification of Blockchain Assets There is currently no general legal framework or single legal definition of blockchain assets applicable in Luxembourg. Moreover, there are several related terms often used in this context, eg, the Luxembourg regulator does not use the term “blockchain assets” in its guidance, but uses the term “virtual assets” , while the term “crypto-assets” has been used at an EU level, eg, in MiCA and in documentation issued by ESMA. Regardless of the terminology used, blockchain assets may, or may not, be considered a form of regulated financial instruments falling within the scope of existing financial services regula - tion, and such assessment should be made on a case-by-case basis depending on the charac - teristics of the asset. With regard to AML/CFT legislation, the Lux - embourg AML Law was amended in 2020 in accordance with the fifth EU anti-money laun - dering directive (2018/843/EU), by introducing the obligation of virtual asset service providers to register with the CSSF and to comply with certain AML/CFT obligations. Virtual assets are defined as a digital representation of value, including virtual currencies, that can be digi - tally traded, or transferred, and can be used for payment or investment purposes, however, excluding virtual assets that fulfil the conditions of electronic money, as defined in the Payment Services Law, and virtual assets that fulfil the conditions of financial instruments, as defined in the Financial Sector Law. In addition, MiCA regulates crypto-assets that so far have fallen outside of the scope of spe - cific regulation. The definition of crypto-assets includes any digital representation of value or rights that may be transferred or stored elec -
MTF. However, thanks to the DLT Pilot Regime (see 2.5 Regulatory Sandbox ), MTFs can be granted temporary exemptions, for a period of up to six years, from certain existing require - ments in order to enable DLT to also be used for trading (see 10.5 Regulation of Blockchain Asset Trading Platforms ). 10.2 Local Regulators’ Approach to Blockchain The CSSF has indicated that it applies a princi - ple of technology neutrality towards the use of blockchain and has acknowledged that innova - tive processes and technologies such as DLT, when properly used, can improve the provision of financial services. In line with this approach, in 2022 the CSSF published a non-binding document in the form of a White Paper, which aims at guiding inter - ested professionals in the conduct of their due diligence process related to DLT and its use in the provision of services in the financial sector. The purpose of the White Paper is to ensure that risks and advantages in the use of such technol - ogies are appropriately taken into consideration, by proposing key questions and recommenda - tions that should be considered by market par - ticipants when performing their risk analysis and due diligence processes. Overall, with the adoption of MiCA and the Blockchain IV Law, Luxembourg is emerging as a leading European hub in the digital finance sector. The dual framework of EU and national legislation creates a secure environment for digi - tal assets, digital securities, and related technol - ogies and highlights Luxembourg’s commitment to aligning with EU objectives for innovation and market security.
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