CSSF Opens the Door to Crypto Exposure for UCITS and AIFs

The CSSF has updated its crypto-assets framework for UCITS and AIFs following the entry into force of MiCAR. The revised approach allows limited crypto exposure for UCITS and broader flexibility for AIFs, subject to strict eligibility, licensing and risk-management requirements. The update marks a notable evolution in Luxembourg’s regulatory stance and reinforces its position as a leading European funds hub for digital assets.

Luxembourg's financial regulator, the CSSF, has taken a decisive step forward in the regulation of crypto-assets by publishing an updated FAQ for undertakings for collective investment (UCIs), effective from February 4, 2026.

This update reflects the entry into force of Regulation (EU) 2023/1114 (MiCAR) and signals a significant shift in the CSSF's position, notably by expanding the possibilities for UCITS and AIFs to gain exposure to crypto-assets.

Indirect investment in crypto-assets by UCITS permitted up to 10% of NAV

The main changes introduced by the CSSF include, for the first time, the possibility for UCITS to invest indirectly in crypto-assets for up to 10% of their net asset value (NAV), provided that such exposure is achieved exclusively through transferable securities that do not embed derivatives and qualify as eligible assets under UCITS rules. However, UCITS are not permitted to hold crypto-assets directly, and fund managers must notify the CSSF in advance, update their risk management frameworks, and amend fund documentation accordingly.

Retail AIFs allowed direct and indirect crypto-asset exposure up to 10% of NAV

For retail AIFs (i.e. AIFs not exclusively reserved for well-informed investors), the CSSF now allows investment in crypto-assets up to 10% of their NAV, both directly and indirectly, while AIFs reserved for well-informed or professional investors can invest in crypto-assets without any quantitative restriction, provided they comply with all applicable regulatory requirements. For all types of funds, the CSSF emphasises the specific risks associated with crypto-assets and requires the implementation of robust internal controls, transparent communication with investors, and ongoing compliance with regulatory requirements.

New licensing requirements for AIFs with significant crypto-asset strategies

The CSSF requires prior specific authorisation, known as the "Other-Other Fund-Crypto-assets" licence, for managers wishing to expose an AIF to more than 10% in crypto-assets, except where such exposure is solely via investments in target funds and remains above 20% of NAV, in which case a "fund of funds" licence is required.

Managers must also present their project to the CSSF and assess the risk management capabilities of the target fund managers involved in crypto-asset strategies. Moreover, the CSSF expects managers to demonstrate an adequate understanding of the money laundering and terrorist financing risks posed by crypto-assets, and to implement appropriate mitigation measures, including conducting a vertical risk assessment as part of their AML/CTF framework.

This initiative again highlights Luxembourg's forward looking approach and commitment to financial innovation, ensuring it remains at the forefront as Europe's leading investment funds centre.