Mike Gordon

Growth in funds registered as Reserved Alternative Investment Funds (RAIFs) in Luxembourg has slowed in February and March, according to a data analysis by Investment Officer Luxembourg.

With its DLT white paper released in January, supervisor CSSF has triggered a broad industry debate on the use blockchain technology to adopt virtual assets, and about public versus private blockchains. The discussion is seen as positive, and, according to one industry expert, could pave the way “for mass adoption of asset tokenisation”.

Nearly nine years after the introduction of a Luxembourg fund vehicle known as the SCSp, allowing the alternative investment fund industry to register special limited partnerships, competing financial centre Ireland has finally introduced its own version, enabling it to finally provide direct competition with the Grand Duchy in this area.

The popularity of digital assets will lead to significant changes for the financial industry, including within the area of asset custody. Today’s global custody industry goes back to regulatory changes in the 1970s. Digital assets, the most well-known being Bitcoin, differ in several ways from traditional assets, including the role of information technology, specifically of private key management, which will be accompanied by potential regulatory differences.

Digital assets are the talk of the Luxembourg financial centre and across Europe, with Mairead McGuinness, the European commissioner for financial services emphasising how the financial sector digitalisation can provide better access to products and services. New regulation is on the way to allow providers to build up the trust they need to overcome the negative publicity that has been attached especially to cryptocurrencies. 

Companies active in Luxembourg are at the forefront of harnessing digital assets in service of the financial industry. 

A Luxembourg-based investment firm that announced late last week that it will launch what it calls the first alternative fund investing entirely in crypto assets in this country by year’s end is counting on this country’s high quality regulation and supervision to put to rest long-standing doubts about crypto assets.

A comprehensive review by the European Commission has the potential to put the European long-term investment funds (Eltif) regime back on track and set it up for the kind of success Ucits funds have experienced. Eltifs can become competitive with AIFs by removing many factors that made Eltif take-up much lower than had initially been hoped. The investment community has been broadly supportive of the reset.

Impact investing looks to put investment money to work on bringing about measurable change in the poorer societies of the emerging and frontier markets as well as improving the environment. With the successive shocks of Covid and now the Russian invasion of Ukraine rocking Europe and the West, Philipp Mueller, the CEO of BlueOrchard explains that the residents of countries in its markets can provide inspiration for our wealthier society. The key word: resilience. 

Luxembourg has joined the international move to impose sanctions against Russia for its ruthless invasion of Ukraine. It has followed steps taken by other European and global countries and organisations, including condemning Russia’s aggression, even sending some weaponry and equipment to Ukraine’s beleaguered defenders. But there’s one area where Luxembourg appears to be out of step: the high profile application of the sanctions to Russian oligarchic assets held in this country.

Switzerland, long a place for Russian oligarchs to park their money, announced Monday it would set aside its long-standing and deeply-rooted tradition of neutrality in order to freeze Russian financial assets in the country, as the fast-moving international reaction to Russia’s invasion of Ukraine continues. In so doing, it joined the European Union and a growing list of countries attempting to penalise Russia, as Luxembourg drew its financial sector’s attention to several EU sanctions measures.