The authorities of the Grand Duchy of Luxembourg, as officially called one of the smallest countries in Europe, intends to legislatively regulate the technology of blockchain.
Despite the tiny size, the state fully justifies the title of “Grand Duchy”: it is one of the richest countries in Europe, occupying the fourth place in the world in terms of income levels. Due to favorable conditions and an offshore zone, Luxembourg’s jurisdiction has at least 1,000 investment funds and more than 200 banks – more than in any other city in the world. In addition, the offices of many organizations of the European Union are located in the duchy, including the European Court of Justice, the supreme legal body of united Europe.
The bill is designed to ensure that all transactions on the blockchain have the same degree of protection and the same legal status as transactions that are carried out without the involvement of technology.
The Minister of Finance of Luxembourg, Pierre Gramegna, believes that the authorities of the country seek this step to guarantee investors protection and give them the opportunity to use blockchain as a technological tool without hindrance. The Minister says:
“This bill is designed to serve the interests of investors, as the technology of blockchain is already used – for example, to distribute the shares of mutual funds.”
Luxembourg, surrounded by such industrialized powers as Germany, France and Belgium, is ideally located to become a blockchain hub. Last year, Luxembourg’s prime minister and minister of telecommunications, Xavier Bettel, said:
“The state is fulfilling its role as a kickstarter and a coordinator while leaving technological and commercial choices to the industry”, whilst facilitating projects which create “meaningful projects in cutting-edge technology.”
The new bill is aimed mainly at blockchain. The text of the law does not mention cryptocurrencies or ICO, however, it is said that the technology of blockchain “contributes to the development of new financial products and services”. Earlier this year, the financial regulator of the Grand Duchy Financial Sector Supervision Commission (CSSF) said it did not approve the ICO model yet.