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Luxembourg Enhances Blockchain Security Measures for Dematerialised Securities

In a significant move, Luxembourg has modernized its legal framework on dematerialized securities by explicitly confirming the use of distributed ledger technology (DLT).

Key Changes Introduced by the Law

The new law introduces two key changes:

• DLT-Enabled Issuance Accounts: The law clarifies that issuance accounts for dematerialized securities can be kept using DLT. This means that central account keepers and liquidation organisms responsible for verifying the number of securities in circulation are now permitted to use DLT to record this information.
• Expanded Scope of Account Keepers: The law expands the scope of entities allowed to act as account keepers for unlisted debt securities. Previously, only certain regulated Luxembourg service providers could perform this function. Now, credit institutions and investment firms authorized in a Member State of the European Economic Area will be able to act as central account keepers for unlisted debt securities, provided they have appropriate control mechanisms and IT security arrangements.

Benefits of the New Law

The new law aims to provide greater flexibility and efficiency in the issuance process, while maintaining high standards of security and transparency. It is expected to benefit both issuers and investors by reducing costs and increasing speed in the dematerialized securities market.

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