Luxembourg hosts €7.3 trillion in funds, almost a quarter of the volume issued in the EU, despite a population that accounts for signficantly less than 1%. So it is no surprise that it has been progressive in implementing several laws to support blockchain, with Blockchain Law 4 enacted at the end of 2024.
That law made two key changes. It expanded support for DLT from unlisted debt securities to equities, including funds. And it introduced a new controlling agent role, which is similar to Germany’s crypto securities registrar. This doesn’t just sidestep the need for a central securities depository (CSD), it also drops the requirement to have a separate custodian. By reducing the number of intermediaries, it removes the need for multiple sets of accounts and reconciliations, thereby lowering costs. In other words, one company can cover the entire value chain from issuance to custody. So the controlling agent maintains the securities issuance account; ensures the number of shares on the DLT match what was issued; and supervises the custody chain if it exists. Additionally, this law enables investors to optionally use self-hosted wallets.
Last month the Luxembourg regulator CSSF granted its first controlling agent license to local tokenization firm Investre, which already had a MiFID license. The company has relationships with asset managers such as Schroders and Nordea, and has already minted or burned over 3,000 fund tokens since launch.
So far the tokens are representations of existing fund units. With the new license Investre will move into native issuance (digital funds). Until now it has found Stellar to be the optimal blockchain, which also aligns with Investre’s sustainability principles. However, native token issuance requires greater blockchain interoperability to move tokens across different platforms and secondary markets, prompting Investre to plan support for EVM-compatible chains.
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