Q Securities Blazes Crypto Assets AIF Trail

Tomasz Matczuk, president of the supervisory board of Q Securities (Photo © Q Securities)

A Luxembourg investment firm is seeking CSSF approval to offer depository services for crypto funds. If successful, Q Securities will be the first alternative fund depository services firm in Luxembourg servicing funds investing only in crypto assets.

The move is driven by a trend by institutional investors and family offices to seek exposure to crypto assets.

“Following the latest CSSF FAQ document published at the beginning of the year and providing necessary guidance on crypto funds set-up and compliance requirements, we have informed the regulator about our intent to offer depositary services to crypto funds in Luxembourg,” said Tomasz Matczuk, president of the supervisory board of Q Securities.

Crypto assets: defined as cryptocurrencies and other assets whose value has been moved to blockchain, have undergone a transformation since the 2009 launch of the much-hyped cryptocurrency bitcoin.

According to MarketsandMarkets, the global crypto asset management market size is projected to grow from USD 0.4 billion in 2021 to USD 1.2 billion by 2026, at a Compound Annual Growth Rate (CAGR) of 21.5%.

While Luxembourg has no formal regulatory stance on crypto assets, the CSSF FAQ, which was published in January 2022, outlines that alternative investment funds (AIFs) may invest in crypto assets.

“For quite some time, the cryptocurrency ecosystem was viewed by the financial industry and large corporations rather with scepticism, with the biggest concerns focusing on security, volatility and lack of regulations,” Q Securities business development director Wojciech Kozlowski said in a statement dated 16 March. “But as soon as the regulation was introduced, we are seeing a sudden trend shift and a massive inflow of assets into the crypto universe.”

Currently, investors seeking exposure to crypto assets may invest directly through dedicated exchanges and crypto-trading platforms or indirectly through ETFs, for instance. An AIF gives another opportunity for indirect investments, the portfolios of which are handled by asset managers.

Kozlowski reckons that Luxembourg could do more to develop a reputation for being “truly crypto-friendly” and compete with nations such as Switzerland and Germany. He would like to see the country establish a legal framework for the opening of crypto banks or their branches.

Q Securities was the first investment firm in Luxembourg authorised to offer depository services to alternative funds. It expects to have the Luxembourg-domiciled fund running within six months, pending regulatory approval.

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