Bill-7637 — Luxembourg takes the next step towards a decentralized Future
On 21.01.2021, law no. 7637 was adopted by the Luxembourg Parliament and aims to resolve the last uncertainties in the issuance and circulation of blockchain based securities. The law modernizes the 1993 law on the financial sector and the law of 2013 on dematerialized securities.
The new act of parliament regulates the issuance of dematerialized securities through the use of secure electronic registration mechanisms, including distributed electronic registers and databases. Consequently, following the Blockchain Act of 2019, the Luxembourg government sends another signal that the promotion of innovation and technology is one of its main objectives.
In addition, the bill intends to open up the operation of the central account holder for unlisted debt securities to credit institutions and investment firms, thereby extending the scope of the law of 2013 on dematerialized securities. The envisaged extension will allow these entities to expand their range of services in the field of dematerialized securities and will also allow issuers of unlisted debt securities to have access to a larger number of participants. Above all, credit institutions and investment firms of the European Union (EU) will benefit from the new regulation, as until now only certain regulated Luxembourg service providers were permitted to act as central account holders in accordance with the law of 1993 on the financial sector.
All entities that want to act under the new bill are obliged to have an adequate infrastructure, control and security mechanisms equivalent to those required for authorization as a central account holder (as provided for in Article 28–11 of the Law of 1993 on the financial sector). This obligation is necessary to ensure fair competition for all market participants and high standards in terms of quality and security.
The new law not only provides a space for innovation and development and opens the market for European institutions, but also adds legal certainty to this highly promising technology.
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