The CSSF (Commission de Surveillance du Secteur Financier) has recently published two warnings on its website regarding in particular the significant risks linked to investments in initial coin offerings ("ICOs") and tokens and virtual currencies (also called "VCs", "cryptocurrencies" or "virtual money").
As the CSSF considers these investments to be unsuitable for all types of investors and investment objectives, they prohibit direct and indirect investments in virtual currencies and/or tokens through ICOs by UCITS, UCIs addressing non-professional customers1 and by pension funds. Only investment funds restricted to professional investors are therefore allowed to invest directly or indirectly in these investments provided that they take into account the relevant risks identified by the CSSF.
The CSSF highlights in particular the fact that virtual currencies and ICOs are not subject to a specific regulation and do not benefit from any guarantee. They are highly volatile and speculative investments, bearing a number of risks including total loss of investment.
Footnote
1. Even though it is not expressly confirmed, the reference to non-professional customers should be understood as covering any type of investor which does not qualify as a professional client within the meaning of MIFID.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.