Implementation of the DLT pilot regime in Luxembourg – Blockchain law III


On 9 March 2023, bill of law 8055 laying down rules for the application of Regulation (EU) 2022/858 on a pilot regime for market infrastructures based on distributed ledger technology (the “Regulation”) was adopted by Parliament.

The Regulation introduces a pilot scheme which allows national competent authorities to temporarily exempt distributed ledger technology (“DLT”) market infrastructures from some of the specific requirements imposed by existing legislation on traditional market infrastructures (for more information on the Regulation, please refer to our eAlert).

In this context, the Regulation amends the definition of financial instruments as set out under Directive 2014/65/EU on markets in financial instruments (“MiFID”) to include financial instruments issued by way of DLT. Consequently, the modified laws of 5 April 1993 on the financial sector (the “1993 Law”) and of 30 May 2018 on the markets in financial instruments (the “2018 Law”) are further amended accordingly.

Furthermore, in the wake of the laws of 1 March 2019 and 22 January 2021 relating to blockchain technology (known as "Blockchain I and II laws"), bill of law 8055 enables the use of DLT for financial guarantees under the amended law of 5 August 2005 on financial collateral arrangements (the “2005 Law”). 

In fact, bill of law 8055 clarifies that the concept of book-entry securities (“titres transmissibles par inscription en compte”) also includes securities registered or existing in securities accounts maintained in or through secure electronic recording devices, including distributed electronic registers or databases. 

Thus, neither the validity, nor the perfection of security interests created under the 2005 Law will be affected by the maintenance of securities accounts within such a secured electronic recording device or by the registration of securities in securities accounts through such a secured electronic recording device. 

Bill of law 8055 contemplates the entry into force of the amendments to the 1993 Law and the 2018 Law on 23 March 2023. 

Should you have any questions on the above, please do not hesitate to contact one of our experts of the digital assets team and regulatory team.