Luxembourg Parliament adopts Blockchain Law 4
24 December 2024 Luxembourg
Image: dbrnjhrj/stock.adobe.com
Blockchain Law 4 has been adopted by the Luxembourg Parliament in an effort to expand the country’s legal framework to support the development of digital securities and tokenisation.
The framework aims to enable the financial sector to leverage distributed ledger technology (DLT) while ensuring legal certainty, flexibility, and transparency for issuers and investors.
According to Luxembourg for Finance, the agency for development of the region’s financial centre, this legislation introduces the possibility of using a monitoring agent for securities issuance.
The agent is designed to fully utilise DLT technology in carrying out its missions, which includes maintaining the issuance account, tracking the chain of title for securities, and reconciling issued securities.
This new, optional regime for issuers looks to offer an alternative to the existing model which currently requires a two-tier holding chain between the central account keeper and secondary account keepers.
In addition, the new law aims to allow for increased efficiency for securities issuance via DLT.
Following the first three Blockchain Laws, implemented between 2019 and 2023, this new legislation confirms Luxembourg’s role within the European Union in the use of DLT technology, particularly in the domain of dematerialised securities issuance, adds Luxembourg for Finance.
The group adds: “Luxembourg’s leadership has been once again illustrated in the past few weeks with the launch of a digital bond by the European Investment Bank on HSBC’s Luxembourg-based Orion platform as well as Franklin Templeton’s tokenised money market fund in Luxembourg.”
The framework aims to enable the financial sector to leverage distributed ledger technology (DLT) while ensuring legal certainty, flexibility, and transparency for issuers and investors.
According to Luxembourg for Finance, the agency for development of the region’s financial centre, this legislation introduces the possibility of using a monitoring agent for securities issuance.
The agent is designed to fully utilise DLT technology in carrying out its missions, which includes maintaining the issuance account, tracking the chain of title for securities, and reconciling issued securities.
This new, optional regime for issuers looks to offer an alternative to the existing model which currently requires a two-tier holding chain between the central account keeper and secondary account keepers.
In addition, the new law aims to allow for increased efficiency for securities issuance via DLT.
Following the first three Blockchain Laws, implemented between 2019 and 2023, this new legislation confirms Luxembourg’s role within the European Union in the use of DLT technology, particularly in the domain of dematerialised securities issuance, adds Luxembourg for Finance.
The group adds: “Luxembourg’s leadership has been once again illustrated in the past few weeks with the launch of a digital bond by the European Investment Bank on HSBC’s Luxembourg-based Orion platform as well as Franklin Templeton’s tokenised money market fund in Luxembourg.”
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