7th November 2018
Cryptocurrency Regulations in Luxembourg
Cryptocurrency Regulations in
Cryptocurrencies: Not legal tender
Cryptocurrency exchanges: Legal, must register with the CSSF
There are no specific cryptocurrency regulations in Luxembourg but the government’s legislative attitude towards cryptocurrencies is generally progressive. Finance Minister Pierre Gramegna has commented that, given their widespread use, cryptocurrencies should be “accepted as a means of payment for goods and services” in Luxembourg. Although cryptocurrencies are not legal tender they are considered intangible assets for tax purposes, and, in 2018, authorities issued advice on the tax treatment of cryptocurrencies which, in a business context, depends on the type of transaction involved. Accordingly, for tax purposes, use of cryptocurrencies as means of payment does not affect the nature of income, aligning compliance with Luxembourger tax rules.Cryptocurrency exchanges or virtual currency platforms in Luxembourg are regulated by the CSSF and new crypto businesses (i.e. service providers or intermediaries that are receiving or transferring) must obtain a payments institutions license if they wish to begin trading.
The licenses impose AML/CFT reporting obligations under Luxembourg’s “electronic money” statutes: the first crypto license was granted in 2016 to Bitstamp, which trades in a range of currencies, including USD, EUR, Bitcoin, and Ethereum, and passports holders into other EU member-states. In 2018, following Bitstamp, the Japanese virtual currencies exchange platform, bitFlyer, was granted a licence. In 2020 amendments were made to Luxembourg’s AML/CFT laws introducing new registration and governance requirements for cryptocurrency and virtual assets service providers (VASPs). The amendments also clarified the legal definition of cryptocurrencies, VASPs, virtual assets, safeguarding, administrational service providers, and custodian wallets providers for regulatory purposes.