On 29 November 2021, the CSSF issued a first FAQ on virtual assets* considerations that provides further clarity on:
What kind of Luxembourg investment funds may invest in virtual assets;
What are the additional requirements for investment funds managers willing to manage virtual assets;
Specific considerations on Money Laundering/Terrorist Financing (ML/TF) for virtual assets.
*Virtual assets are defined in article 1 (20b) of the law of 12 November 2004 on the fight against money laundering and terrorist financing, as amended.
Long awaited by market participants, this FAQ clarifies that:
Which entities are concerned
Alternative investment funds
Alternative investment managers
Virtual assets service providers
This formal clarification will undoubtedly be warmly welcomed by the market and will drive further developments for the Luxembourg asset management industry. However, knowing what is possible vs what is not is only the starting point, and numerous preliminary steps shall be undertaken when envisaging a virtual asset investment vehicle, among others:
Acknowledge and understand the breadth of the virtual assets universe, their value proposition and investment rationale (more than 15,000 virtual assets exist at the time of writing);
Elaborate and design sound investment strategies taking the full potential of virtual assets into account (i.e. yield enhancement features);
Design fit for purpose internal policies (risk management, valuation, etc.) taking the specifics of virtual assets into account;
Obtain an unbiased view on key players in the space and perform due diligence on potential stakeholders with an emphasis on depositary and custody arrangements.
These are only some of the key areas to consider before entering this fascinating yet complex and fragmented new ecosystem.
How we can help you
The Blockchain & Crypto-assets team of PwC Luxembourg has developed a comprehensive suite of services to support you every step of the way in your virtual assets fund venture.
Thomas Campione, CFA
Blockchain & crypto-assets Leader, PwC Luxembourg
Tel: +352 62133 50 93