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15 October 2025

Luxembourg Adds Bitcoin To Its Sovereign Wealth Fund And Launches Europe's First Blockchain-Based Treasury Issuance

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Luxembourg continues to strengthen its position as a European leader in digital finance. During the presentation of the 2026 national budget, Minister of Finance Gilles Roth unveiled two groundbreaking...
Luxembourg Finance and Banking
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Luxembourg continues to strengthen its position as a European leader in digital finance. During the presentation of the 2026 national budget, Minister of Finance Gilles Roth unveiled two groundbreaking initiatives that place the country at the forefront of public sector financial innovation.

1. Europe's First Blockchain-Based Sovereign Debt Issuance in 2026

In 2026, Luxembourg will become the first EU member state to issue a blockchain-based treasury certificate.

The pilot project — supervised by the Commission de Surveillance du Secteur Financier and the Central Bank of Luxembourg — will test the use of distributed ledger technology (DLT) in short-term sovereign debt issuance.

"We want to understand, in practice, how this technology can enhance transparency and efficiency in public markets," said Minister Roth.

The objective is to increase traceability, reduce operational costs, and evaluate the potential efficiency gains associated with tokenizing sovereign financial instruments.

The initiative forms part of Luxembourg's broader strategy to integrate blockchain into public financial infrastructure, under strict regulatory supervision.

2. The Luxembourg Sovereign Wealth Fund Allocates 1% to Bitcoin

In a second landmark decision, the Intergenerational Sovereign Wealth Fund of Luxembourg (FSIL) has allocated 1% of its portfolio to Bitcoin, becoming the first European sovereign fund to gain exposure to this asset class.

Established in 2014, the FSIL aims to secure the state's long-term revenues. Currently managing $730 million in assets, the fund is expected to reach €850 million by the end of 2026.

Under a revised investment policy approved in July 2025, the fund may now allocate up to 15% of its assets to alternative investments — including private equity, technological infrastructure, and digital assets.

According to Jonathan Westhead, spokesperson for Luxembourg for Finance, "recognizing the growing maturity of this asset class and underscoring Luxembourg's leadership in digital finance, this investment applies the new investment policy adopted earlier this year."

To mitigate operational risks, the FSIL invested in regulated Bitcoin exchange-traded funds.

"Some will argue that this move comes too late; others will point to Bitcoin's volatility. But given the FSIL's mission and profile, a 1% allocation strikes the right balance between prudence and innovation," Westhead added.

These developments reinforce Luxembourg's role as Europe's most forward-looking jurisdiction for regulated digital finance, coinciding with the progressive implementation of the Markets in Crypto-Assets Regulation (MiCA) across the EU.

The sovereign blockchain issuance positions Luxembourg as a pioneer in the tokenization of public assets, blending DLT innovation with traditional regulatory oversight.

The FSIL's Bitcoin allocation, though modest, sends a strong institutional signal about the mainstreaming of regulated digital assets in sovereign investment strategies.

Together, these measures demonstrate a governance-driven innovation strategy that prioritizes regulatory prudence, technological transparency, and operational efficiency.

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