Further to the release of its FAQ providing practical responses to issues related to investments in virtual assets by undertakings for collective investment in transferable securities (UCITS), see our article here, the Luxembourg Supervision Commission of the Financial Sector (CSSF) published a guidance targeted at credit institutions.
Released on December 23 and updated on January 4th, the FAQ Virtual Assets – Credit institutions outlines that credit institutions:
May directly invest in virtual assets (VAs) provided that ‘the classification as well as the accounting approach retained is assessed, duly documented and validated by the authorised management’.
May open accounts that allow customers to deposit VAs to the extent that, comparatively to securities accounts, such accounts are segregated from the bank’s own assets. Although credit institutions cannot open bank accounts/current accounts in VAs.
Are required to submit and present a detailed business case to the CSSF including a risk-benefit assessment prior to the provision of VA services or any other related activity (e.g., issuance of asset-referenced tokens and e-money tokens or dematerialised record-keeping via DLT).
May be subject to registration requirements as a VA service provider in certain circumstances.
The FAQ also includes guidance on CSSF’s requirements with regard to investor protection, the management of operational disruption, the general principles of sound and prudent banking and fund depositaries acting as depositary for investment funds investing directly in virtual assets.
Both FAQs will be updated on a regular basis.