The Commission de Surveillance du Secteur Financier (CSSF), the government body responsible for financial regulation in Luxembourg, has issued a release detailing its treatment of digital currencies as well as its expectations for bitcoin businesses.
Issued on 14 February, the communique included familiar consumer protection warnings, but also featured a unique invitation for interested entrepreneurs.
The CSSF encouraged these individuals to contact its officials about facilitating digital currency-related commerce in the country, and suggested it will operate on a case-by-case basis with its regulatory decisions.
Read the statement:
“Interested persons who would like to establish themselves in Luxembourg in order to carry out an activity of the financial sector […] shall define their business purpose and their activity in a sufficiently concrete and precise manner to allow the CSSF to determine for which status they need to receive the ministerial authorisation.”
Michael Jackson, partner at Luxembourg-based Mangrove Capital Partners, spoke to CoinDesk about his conversations with Luxembourg’s regulators, who he characterized as different from others around the globe due to their positive first response to regulation.
“[They’re saying] we’re very open to people coming here and explaining their businesses. We don’t have any problem with a bitcoin business, as long as it does what it’s supposed to do and behaves properly.”
CSSF breaks silence on bitcoin
Coming in at just one page, the communique nonetheless provided a broad overview of the CSSF’s thinking on digital currencies.
The CSSF noted it does consider digital currencies to be money, as they are accepted as a means of payment by “a sufficiently large group of people”. However, the CSSF did not define digital currency as legal tender.
The release went on to explain how digital currencies like bitcoin are different from other forms of electronic money, and reiterated concerns raised by the European Banking Authority (EBA) and European Securities and Market Authority (ESMA) about their use. Though, notably it did not call for unique laws for bitcoin businesses.
Bitcoin in Luxembourg
Though not a native of the country himself, Jackson indicated that Luxembourg’s bitcoin community has been in open dialogue with domestic regulators for some time.
Despite the positive statements, though, he stressed that the bitcoin community suffers a communication gap with regulators that has held back discussions, in Luxembourg and around the globe.
However, he sees this latest announcement as a step forward:
“There are many different models, some people are running exchanges, some people are doing transaction processing, all sorts of things, and all of these different business models have different licensing regimes. So, the first thing that you’re going to have to do is sit down.”
Domestic and global influence
Gary Cornelius, an admin for the Bitcoin Luxembourg Facebook group, suggested that the statements may not have much domestic impact, as the bitcoin business scene remains small. Coinmap indicates the local business community amounts to only a few bitcoin-accepting merchants.
Still, Jackson expressed optimism that Luxembourg’s decision would carry weight in the broader European and global communities. He noted that Luxembourg’s willingness to discuss the matter may resonate given that it is a financial center of Europe.
The statements come at a time when some in the EU, like France’s Minister of Economy and Finance, are calling for broader cooperation on digital currency regulation.
Image credit: Luxembourg City via Shutterstock