16 September 2014

Luxembourg authorities open to Bitcoin

12 March 2014  |  911 views  |  0 Source: Commission de Surveillance du Secteur Financier

The financial sector regulators are increasingly confronted with the phenomenon of virtual currencies. At the level of the European Union, the supervisory authorities EBA and ESMA deal with this subject.

At this stage, as regards the situation in Luxembourg, the CSSF deems it useful to provide the following answers to the most frequently asked questions of general nature.

a) On the one hand, "virtual" currencies are considered as money, since they are accepted as a means of payment of goods and services by a sufficiently large group of people.

More specifically, they are scriptural money as opposed to cash in the form of banknotes and coins. The scriptural nature does not require a tangible writing, similarly to electronic documents or signatures that do not require paper. Virtual currencies may thus be electronic money, but not necessarily within the meaning of the European Directive 2009/110 which provides for a definition of electronic money limited to its own scope. The issuing of virtual currencies is not regulated from a monetary point of view. The methods for its issuing and the definition of its relation with other monies may vary from one type of virtual currency to another. Virtual currencies are obviously not legal tender and they entail risks for their holders. These risks were subject to a public warning issued by the EBA and ESMA.

b) On the other hand, the CSSF reminds that nobody can be established in Luxembourg to carry out an activity of the financial sector with out an authorisation by the Minister of Finance and without being subject to the prudential supervisi on of the CSSF (Article 14 of the law of 5 April 1993 on the financial sector).

Therefore, the potential interested persons who would like to establish themselves in Luxembourg in order to carry out an activity of the financial sector (as, for instance, the issuing of means of payments in the form of virtual or other currencies, the provision of payment services using virtual or other currencies, the creation of a market (platform) to trade virtual or other currencies) shall define their business purpose and their activitivity in a sufficiently concrete and precise manner tociently concrete and precise manner to allow the CSSF to determine for which status they need to receive the ministerial authorisation.

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