Are companies and individuals able to use cryptocurrencies to buy goods and services in Luxembourg? If so, what systems do they need to have in place?

The Luxembourg regulator, the Commission de Surveillance du Secteur Financier (CSSF) has adopted the view that ‘virtual’ currencies can be considered to be money, since they are accepted as a means of payment for goods and services by a sufficiently large group of people.

Despite this, they are not legal tender in Luxembourg and would be considered an investment agreed between two parties.

Several companies, some of them active in the financial sector, regularly use cryptocurrencies, including Bitstamp Europe S.A., which is a Luxembourg payment institution (under the Payment Service Directive), authorised and regulated by the CSSF. It allows trading between USD and EUR currency against several cryptocurrencies such as Bitcoin, Litecoin, Ethereum or Ripple and allows deposits and withdrawals through the European Union’s Single Euro Payments Area.

SnapSwap International S.A. is another Luxembourg CSSF authorised and regulated electronic payment institution that also provides services. It allows its customers to use, hold and transact virtual currencies; while offering payment, remittance and currency exchange using blockchain and distributed ledger technology.

Thanks to the passporting system in place in the European Union, both companies may potentially offer their services in the 28 European Union member States.

There exists, in addition to these regulated entities, a certain number of projects to set-up investment vehicles, so far non-regulated, investing in cryptocurrencies. These are being closely observed by the regulator.

Only a few Luxembourg retail companies (including Amazon and Tesla) use or accept cryptocurrencies, but distributed ledger technology (DLT) is used progressively in the finance industry in the field of settlement, clearing and fund distribution. It is a substitute for the less efficient and costly market infrastructure model, currently used by transfer agents and central securities depositaries (CSDs).

The DLT can facilitate and automate procedures while reducing operational inefficiencies and errors. Interactions between intermediaries are decentralised, faster, and more transparent.