On 10 February 2025, the law of 6 February 2025 regarding, notably, digital finance was published in the Official Journal of Luxembourg (the “Law”).
A National Framework for the Implementation of MiCAR
The Law sets out national rules for the application of Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCAR). As a reminder, MiCAR is the first harmonized regulatory framework within the European Union governing the issuance, public offering, and admission to trading of certain crypto-assets, as well as the provision of crypto-asset services. It introduces strict requirements regarding authorization, supervision, and investor protection, aiming to create a safer and more transparent European market for crypto-related activities.
Luxembourg as a Strategic Hub for Digital Assets
Luxembourg aims to establish itself as a key European hub for digital assets. In parallel with MiCAR’s implementation, the country is also rolling out the Blockchain IV law, which seeks to further integrate distributed ledger technologies (DLT) into the national legal framework. This initiative underscores Luxembourg’s commitment to fostering innovation while ensuring robust regulatory oversight.
A Strengthened Role for the CSSF
In this context, the Commission de Surveillance du Secteur Financier (CSSF) has been designated as the competent authority responsible for ensuring the application of MiCAR in Luxembourg. The CSSF will supervise:
- Crypto-asset service providers (CASPs)
- Issuers of asset-referenced tokens (ARTs)
- Issuers of electronic money tokens (EMTs)
The CSSF has been granted the necessary supervisory and investigative powers, including on-site inspections, and may impose administrative sanctions for noncompliance. It is also authorized to recover its staff, financial, and operational costs through fees imposed on offerors, applicants for trading admission, or operators of trading platforms for crypto-assets other than ARTs and EMTs.
Compliance Requirements for Market Participants
Entities subject to MiCAR must adhere to strict requirements, including:
- Filing an authorization or registration request with the CSSF for CASPs and token issuers subject to MiCAR
- Implementing robust internal controls related to governance, risk management, and compliance
- Complying with anti-money laundering (AML) and counter-terrorism financing (CTF) obligations
- Publishing comprehensive information documents for crypto-asset offerings to ensure transparency for investors
The End of the VASP Regime and the Transitional Period Until July 2026
The Law also amends the existing framework on AML and CTF by fully integrating CASPs into the amended law of 12 November 2004, replacing virtual asset service providers (VASPs). However, VASPs registered as of 30 December 2024 will benefit from a grandfathering clause, allowing them to continue their activities until 1 July 2026 or until they obtain (or are denied) an authorization under MiCAR.
We would like to thank Lauréline Decottignies for their assistance with this alert.
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