CSSF warnings on ICOs, tokens and cryptocurrencies

On 14 March 2018, the CSSF issued two warning statements on (i) initial coin offerings (ICOs) and tokens and on (ii) virtual currencies (also called cryptocurrencies). The CSSF acknowledges that the blockchain technology underlying ICOs and virtual currencies may bring about certain benefits when used in the financial sector and in various innovative projects.

However, the warning statements remind investors of the risks associated with ICOs and virtual currencies (e.g. fraud, theft, money laundering, liquidity shortage, volatility and price bubble risk, lack of investor protection, technological failure and misleading information).

The CSSF also states that these investments are not suitable for all types of investors and investment objectives. Therefore, UCITS, UCIs addressed to non-professional investors, and pension funds are not allowed to invest directly or indirectly in virtual currencies or tokens through ICOs.

In addition, the persons involved in activities related to virtual currencies or ICOs are invited by the CSSF to consider certain regulatory issues.