Cryptocurrencies and Blockchain Law in Luxembourg: how is global trade changing?

Cryptocurrencies and Blockchain technology have brought many changes in Luxembourg. In what follows you will find a brief overview of how they changed global trade.

One of the secrets behind Bitcoin's success is Blockchain, a public ledger which contains verified and permanent records of transactions among different users in a network.

All transaction data are stored in encryption blocks. The blocks are linked together in a hierarchical order. In this way a chain of data blocks is created, allowing to trace and verify all transactions. Indeed, Blockchain's main purpose is to certify economic transactions among people. So it is a sort of shared ledger, keeping records of cryptocurrency payments and certifying stock and securities exchanges.

In brief, Blockchain technology has the following features:

  • unchangeable ledger;
  • traceable transactions;
  • high safety level, based on cryptographic methods. Before being written in the system, every transaction must be verified by and synchronized with each node of the Blockchain network, so that it becomes both transparent and secure.

Cryptocurrencies can be defined as the representation of a "hidden" currency, or in other terms of a currency which are only visible and usable by people knowing a particular computer code. Thus cryptocurrencies are virtual currencies, in as much as they are electronically generated and exchanged.

Bitcoin is the most popular cryptocurrency.

It can be exchanged in peer-to-peer mode, that is by means of two devices and without intermediaries, in order to purchase goods or services, just like any other normal legal tender.

Because of our everyday needs, digital payment systems are ever more ubiquitous. The risk is represented by the disruption of traditional financial services in order to make room for new forms of virtual money exchange. But after all, this is progress.

Cryptocurrencies and Blockchain Law in Luxembourg: Blockchain law increases security for investors

When talking of cryptocurrencies and Blockchain it is worth noticing that since May 5,2019 in Luxembourg a Law on the use of new technologies for holding and moving financial instruments has entered into force. The Luxembourger Law represents a landmark in its field, with particular regard to the use of the Blockchain for the purposes of holding and moving financial services.

Starting from the principle of technology neutrality, the new Law explicitly recognizes the possibility of using public electronic registration mechanisms, such as the Blockchain, for holding and moving financial instruments, thus offering more transparency and certainty to financial market participants.

By passing this Law, Luxembourg has become the first country in the European Union to have a regulation on this matter, thus enhancing its role as a key player in the field of fintech on a global scale. Thanks to this Law, starting from 2020 Luxembourg will be able to offer one of the safest and more technologically advanced financial systems to its investors, allowing them to operate on global financial markets in the most efficient and safest way possible.

Cryptocurrencies and Blockchain Law in Luxembourg: which areas can benefit from them?

Blockchain can be applied to the following areas:

  • copyright;
  • patent registration;
  • medicine safety;
  • finance;
  • supply chain;
  • energy;
  • real estate market;
  • health.

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.