Luxembourg Proposes Blockchain Bill IV to Enhance DLT Framework and Financial Innovation

On July 24, 2024, Luxembourg's Ministry of Finance proposed Blockchain Bill IV, aimed at enhancing flexibility and legal certainty for issuers using Distributed Ledger Technology (DLT). This bill seeks to update three key financial laws in Luxembourg, expanding the legal framework to include equity securities alongside debt securities, and introducing the role of a control agent for issuing dematerialized securities. The control agent, an EU investment firm or credit institution, will manage the securities issuance account and ensure consistency on the DLT network. The bill also simplifies payment processes and the issuance of securities, potentially utilizing smart contracts to increase efficiency and reduce intermediation.

Luxembourg's approach to DLT emphasizes technological neutrality, recognizing its potential to transform financial services. The country has previously enacted three blockchain-related laws, known as Blockchain I, II, and III, which laid the groundwork for using DLT in financial transactions and collateral arrangements. Blockchain Bill IV builds on these foundations, aiming to position Luxembourg as a leading hub for financial innovation in Europe by continuously updating its regulatory framework to support digital finance and disruptive technologies.

goodwinlaw.com/en/insights/publications/2024/07/alerts-finance-dcb-luxembourg-proposes-updates-to-blockchain-laws