LHOFT

Luxembourg has proposed a groundbreaking law enabling the use of blockchain technology in investment funds, aiming to solidify its position as a global financial leader.

A year of negative crypto-asset industry headlines has left interest in the asset class undiminished, according to a survey of 127 industry practitioners released on Thursday. Respondents agreed crypto assets will be important for the future of Luxembourg’s asset management industry.  Local crypto actors attribute crypto-asset failures elsewhere to poor governance and due diligence failures but, all the same, are happy to see increased regulatory activity in this area. 

Luxembourg is leading the way in Europe when it comes to crypto and blockchain technology. With MiCA, a new set of regulations from the European Parliament, Luxembourg’s early bet on cryptocurrency has been validated. We spoke with Nasir Zubairi, CEO of LHoFT - Luxembourg House of Financial Technology, who sees this as an opportunity for cryptocurrencies and crypto assets to enter mainstream markets within EU countries, and heard from banking association ABBL.

The first day of the 2023 ALFI European Asset Management Conference heard from the head of the European Securities and Markets Authority, Verena Ross, and included panels on the impact of blockchain and digital assets, as well as corporate taxation.

Tokenisation has served as the “acceptable face” of blockchain, with its association with cryptocurrency, with its slightly tawdry reputation. While critics say that using blockchain over a simpler tech solution involves spending unnecessary money, time and effort, others say it opens up interesting possibilities and can actually bring you benefits. Many innovative companies embed the technology in their business plan. Luxembourg has made a tremendous push in this area, including introducing new supportive legislation.

Fintech firms see a role for themselves in assisting and enabling the Luxembourg financial centre’s strong move towards sustainable investing, but call for collaboration and support from the financial industry and the Luxembourg government to make this work.

The spread of web-based platforms has reached into the rarefied atmosphere of private equity, which has historically been paper-based and face-to-face in-person meeting with one’s investment adviser. This is taking place against an industry-wide drive to “democratise” the private assets world, in order to sate huge desire to invest, but also to address the equity issues raised in relation to significant barriers to access, Alfi’s Private Assets Conference made clear this week. 

A Kenya-based fintech-agritech firm called Hello Tractor has emerged as the winner of the fifth edition of Catapult: Inclusion Africa, a week-long financial inclusion bootcamp that is part of an accelerator programme developed by the Luxembourg House of Financial Technology.

Private consumers seeking to invest in virtual assets through investment funds, despite the massive losses incurred by investors in certain cryptocurrencies, should be aware they are doing so without the protection of financial regulatory oversight, Luxembourg financial regulator the CSSF said.

The CSSF document was titled “Notice to private consumers in the context of investment funds providing exposure to virtual assets”. 

The Luxembourg house of Financial Technology was set up in 2016 as a public-private sector initiative to help financial firms adopt and push further with digitalisation. Investment Officer recently met up with its CEO Nasir Zubairi for a podcast interview.