Luxembourg now takes into account distributed ledger technology in its securities law framework


On 14 February 2019, the Luxembourg Parliament approved the bill (7363) amending the law dated 1 August 2001 on the circulation of securities (2001 Law).1

As a result, the 2001 Law now specifies that securities may be registered and transferred using secure electronic registration mechanisms based on distributed ledger technology such as blockchain. This offers an alternative to dematerialization modalities by strengthening security for investors and limiting the number of intermediaries.

Account holders may now hold securities accounts and make registrations of securities by means of secure electronic recording devices. This includes registers or distributed electronic databases of the blockchain type and in particular in the use of tokens (digital asset stored in a blockchain ).

From a technological point of view, this is a new dematerialized security but to which the same rights are legally attached as for traditional dematerialized securities.

It is important to stress that the fungibility of the securities and their transfers through these new arrangements are considered as transfers between securities accounts.

As a next step, a legal status for tokens should be envisaged. This would likely lead to debates, discussions and impacts' assessment, but it would help market players. This legal status should be introduced at the European level rather than only in the Grand Duchy of Luxembourg.

1 The new provisions of the 2001 Law will come into force 4 days after the publication in the Luxembourg Official Gazette (Mémorial).