The debut of the first digitally tradable security in the European Union (“EU”) became a reality when it was officially listed on the Luxembourg Stock Exchange (“LuxSE”) on October 24, 2023.
How has the Luxembourg legislative framework contributed as a catalyst to facilitate this development?
The Grand-Duchy of Luxembourg maintains a cutting-edge role in the blockchain (“Blockchain”) era by strengthening its legal framework with the adoption of three legislative texts, namely, the laws of 1 March 2019 ("Blockchain I Law"), of 22 January 2021 ("Blockchain II Law") as well as of 15 March 2023 ("Blockchain III Law").
Blockchain I Law gave the ability of securities accounts to be maintained on the Blockchain /distributed ledger technology (“DLT), and credited securities to be transferred on the Blockchain/DLT. Subsequently, the Blockchain II Law concentrated on the securities issuance account and acknowledged the feasibility of maintaining securities issuance account and securities registrations may be carried out within or through the Blockchain/DLT. Added to this, the Blockchain II Law extended the status of the central account keepers at the level of service providers. Further, Blockchain Law III amended the law of 5 August 2005 on financial collateral arrangements by widening the concept of book-entry transferable financial instruments which now includes financial instruments registered in DLT.
The World Bank’s €100 million Digital Native Note is the first digitally native security listed on a regulated market for trading using Euroclear's Digital Securities Issuance (D-SI) service.
This milestone marks the launch of a new market in Luxembourg allowing the listing and trading of digital securities on the LuxSE regulated market.
