CSSF Update on Crypto Assets by Luxembourg UCITS and AIFs

The Luxembourg supervisory authority, the CSSF¹, has taken two major steps that impact the investment in and the use of crypto assets by Luxembourg UCITS² and AIFs³.

1. The CSSF has updated what was previously known as the ‘FAQ on virtual assets,’ (i) renaming it the FAQ on crypto assets for undertakings for collective investment on 4 February 2026⁴ (the Crypto FAQ), (ii) relaxing its position on investments by Luxembourg UCITS and AIFs in crypto assets and (iii) clarifying requirements for management companies and alternative investment fund managers (AIFMs) when servicing UCITS and AIFs that have investments in crypto assets.
2. The CSSF has updated its FAQ on the act of 17 December 2010 on undertakings for collective investment, as amended (the UCI FAQ)⁵ on 17 February 2026, clarifying that a UCITS can accept e-money tokens as payment for subscriptions and as a form of ancillary liquid asset.

Investments in crypto assets by Luxembourg UCITS and AIFs

In terms of changes, in the Crypto FAQ, the CSSF has replaced the term ‘virtual assets’ with the term ‘crypto assets’ as such term is defined in Regulation (EU) 2023/1114 on markets in crypto-assets, as amended (MiCAR)⁶.

The CSSF has previously held the view that crypto assets are not suitable for all kinds of investors and prevented UCITS and AIFs that are marketed to non-professional investors from being able to invest in crypto assets.

Under the updated Crypto FAQ, the CSSF provides that UCITS can indirectly invest in crypto assets up to a maximum 10% of its net asset value, provided that (i) such investment is made within the ‘trash ratio’⁷ and (ii) the crypto asset is a transferable security without an embedded derivative⁸. Furthermore, the ability to invest in crypto assets must be disclosed in the UCITS prospectus, meaning it is effectively subject to the prior approval of the CSSF. It is important to note that the crypto assets that a UCITS is permitted to acquire fall outside of the scope of MiCAR, since MiCAR does not regulate crypto assets qualifying as transferable securities that remain regulated under traditional securities law.

Part II UCIs⁹ that are AIFs that can be marketed to retail investors can, directly or indirectly, invest in crypto assets up to a maximum of 10% of their net asset value. As is the case for UCITS, the prospectus must disclose the possible investment in crypto assets and, as Part II UCIs are also under the direct supervision of the CSSF, the investment in crypto assets must be approved by the CSSF.

Luxembourg AIFs that can only be marketed to well-informed investors, such as RAIFs, can have a higher exposure to crypto assets. Well-informed investors encompass professional investors under MiFID¹⁰ and so-called sophisticated retail investors¹¹ who are investors committing to invest at least EUR 100,000 and who confirm in writing that they satisfy the requirements to be viewed as well-informed investor¹².

Requirements for Luxembourg management companies and AIFMs

In the Crypto FAQ, the CSSF clarifies what it requires from management companies and AIFMs authorized by the CSSF when managing UCITS and AIFs that have exposure to crypto assets.

The CSSF requires those management companies and AIFMs to provide them with a risk management policy that considers, amongst other things, volatility, liquidity and technological risks embedded in crypto assets, a valuation policy adapted to the specificities of crypto assets, a description of how the custody of crypto assets will be organized with the depositary, a description of the portfolio manager’s experience of crypto assets and an analysis on the assets’ side to prevent money laundering and terrorist financing.

A CSSF authorized AIFM managing an AIF investing more than 10% of its net asset value in crypto assets must specifically be approved by the CSSF to manage an AIF pursuing a crypto asset strategy (the approval resulting in the AIFM having a ‘Other-Other Fund-Crypto-assets license.’) For the avoidance of doubt, an AIFM that is managing an AIF investing in other funds including crypto funds (as opposed to having pursing a crypto asset strategy) does not need to hold this license¹³.

The Crypto FAQ is silent on sub-threshold AIFMs¹⁴, which are AIFMs registered with the CSSF, as opposed to being authorized by the CSSF, and sub threshold AIFMs are therefore not required to comply with the requirements under the AIFM Act other than the registration with the CSSF and the annual reporting on their activities to the CSSF. Whilst the Crypto FAQ does not apply to sub-threshold AIFMs and the AIFs managed by them, in practice as part of the registration process the CSSF is assessing the management, valuation and custody frameworks that will be put in place by a sub-threshold AIFM managing an AIF invested in crypto assets. In addition, as the competent supervisory authority for AML purposes, the CSSF is also assessing the AML framework of those sub-threshold AIFMs intending to manage AIFs invested in crypto assets.

Use of e-money tokens by Luxembourg UCITS

In the updated version of the UCI FAQ, the CSSF clarifies that UCITS may also hold e-money tokens, as defined under MiCAR¹⁵, for the purpose of processing subscriptions with a view of being converted to bank deposits or invested in other eligible assets of the UCITS as soon as practicable.

E-money tokens held by a UCITS will be considered ancillary liquid assets and consequently limited to 20% of the net assets of the UCITS. This limit can only be temporarily breached because of exceptionally unfavorable market conditions or other exceptional circumstances and for a period strictly necessary to rectify the position having regard to the interests of the investors.