On 6 April 2023, the CSSF updated their frequently ask questions (“FAQ”) on virtual assets addressed to undertakings for collective investment (“UCIs”), (the “FAQ”). This update involved the modification of the existing Question 2 and the addition of a new Question 3A.
The update of Question 2 clarifies that investments in financial instruments such as derivatives or transferable securities with underlying virtual assets, are to be considered as indirect investments in virtual assets. Without prejudice to the answer given in respect of the new Question 3A, should such an AIF be managed by a Luxembourg authorised AIFM, the latter must obtain an authorisation extension from the CSSF for this new investment strategy.
Question 3A clarifies that the “Other-Other Fund-Virtual assets” license is not required in the case of a Luxembourg investment fund manager (“IFM”) managing an AIF investing in target funds with underlying virtual assets. However, when the AIF invests more than 20% of its net asset value (“NAV”) in one or several target funds, an IFM authorisation for the “fund of funds” strategy is required. The CSSF however, requires that the IFM undertakes an assessment of the ability of the target fund’s manager to identify and manage the risks pertaining to investments in virtual assets, in relation to each target fund with virtual assets as the main underlying exposure. The IFM is responsible for determining whether a target fund has virtual assets as main exposure.
In addition, Question 3A notes that an investment in virtual assets through one or more target funds constitutes an indirect investment in virtual assets, subject to all other conditions contained in the FAQ.
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