The Luxembourg Parliament adopted the Blockchain III Law, which implements the EU DLT Pilot Regime regulations and amends the definition of financial instruments and collateral.
Traditional legislative requirements prevent operators of DLT market infrastructure from designing solutions for trading and settlement of transactions in digital assets due to concerns that these solutions would weaken the existing requirements and safeguards that apply to traditional market infrastructures.
The EU DLT Pilot Regime specifically allows national supervisory authorities to temporarily exempt DLT market infrastructures that are exclusively used for financial instruments issued, recorded, transferred and stored by using DLT from certain requirements imposed by existing legislation for traditional market infrastructures.
The blockchain law also amends the definition of “financial instruments” in the Financial Sector Law to include DLT Financial Instruments. In addition, it amends the Financial Collateral Law by clarifying that the concept of book-entry transferable financial instruments now includes “financial instruments registered or existing in securities accounts held within or through the secured electronic registration mechanisms, including distributed electronic ledgers or databases.”