LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Valerio Scollo and Angela Permunian, GSK Stockmann
tronically, using a distributed ledger or similar technology. The applicable new rules, which include transparency and authorisation require - ments, will differ based on the characteristic of the token. Lastly, in assessing the legal classifications of blockchain assets, financial market participants should take into account guidance published by the Luxembourg regulator. With regard to the classification of virtual assets, the CSSF has emphasised that, although all tokens constitute a digital representation value that is provided by a technology using DLT and cryptography, the tokens come with a variety of rights. The intrinsic characteristics and functions of the token deter - mine the risks and whether or not it is possible for a professional of the financial sector to get involved in them. However, determining when virtual assets qualify as financial instruments under the Financial Sector Law remains subject to a case-by-case assessment. 10.4 Regulation of “Issuers” of Blockchain Assets In 2019, Luxembourg passed a new law which permits the use of blockchain/DLT for the hold - ing and managing of securities accounts. This legal basis, which deemed the use of DLT and blockchain technologies equivalent to other secured electronic recording mechanisms for the transmission of securities, was supplemented in 2021 by allowing these technologies to be used also for the issuance of dematerialised securi - ties. However, the securities issuance accounts relating to securities admitted to trading on a regulated market or an MTF can be held only with a settlement organisation. In addition, depending on the nature of the finan - cial instrument, the issuer may be subject to:
• the Prospectus Regulation; • the Law of 11 January 2008 on transparency requirements for issuers; • the AML Law; • the Market Abuse Regulation; • the MiFID II framework, among others; and/or • MiCA. 10.5 Regulation of Blockchain Asset Trading Platforms The regulation of blockchain asset trading plat - forms depends on the regulatory status of the assets traded on the platform. For blockchain assets that do not qualify as financial instru - ments under the MiFID II framework, the relevant trading platforms are now subject to the regula - tory requirements set out in MiCA, which fully took effect on 30 December 2024. If the blockchain assets qualify as financial instruments under the MiFID II framework, the trading venues would also fall within the scope of the MiFID II rules on trading venues. Pursu - ant to advice published in 2019, ESMA took the preliminary view that if crypto-assets qualify as financial instruments, platforms trading these assets with a central order book and/or match - ing orders under other trading models would be likely to qualify as multilateral systems. Such platforms should therefore operate as regulated markets, MTFs or OTFs. The currently applicable EU regulatory frame - work requires the transfer of any such instrument to be settled through central securities deposi - tories (CSD) in accordance with Regulation (EU) No 909/2014 on central securities depositories, as amended (CSDR), and accordingly, DLT finan - cial instruments cannot currently be admitted to trading on a regulated market, MTF or OTF. However, in view of encouraging technological innovation in the area of settlement, the DLT Pilot
518 CHAMBERS.COM
Powered by FlippingBook