The blockchain and its best known use crypto-currency, also called virtual currency, are so popular that no one could escape their news. Bitcoin, Ethereum and Ripple are some of the success stories in this sector.
At present, the famous Bitcoin (Bitcoin Cash ABC website) is already accepted in many transactions (restaurant, e-commerce, real estate) although it is not a legal tender. Indeed Bitcoin and its competitors are not governed by any central bank.
Like any innovative and fast developing sector, the regulatory framework is yet to be built. This context raises a number of questions: how to become a cryptocurrency player and create a company in this sector in Luxembourg? Can I stipulate the capital of my Luxembourg company in Bitcoin?
The first company with Bitcoin capital was created in 2015 and it seems that this is now possible. However, the technique used by the notary has been to consider the Bitcoins portfolio contributed to the capital as a contribution in kind (as if the founding partner had contributed to the capital a debt, a portfolio of securities). By doing so, while allowing the operation, the Luxembourg doctrine indicates that it refuses for the moment the status of currency to Bitcoin by qualifying contribution in kind rather than contribution in cash contributions to capital.
The Financial Sector Supervisory Commission (CSSF) has made a clear decision on virtual currencies. In order to create a cryptocurrency company in Luxembourg, it is mandatory to obtain an approval issued by the Ministry of Finance while being subject to the prudential supervision of the CSSF.
The virtual currencies sector is governed by the law
According to the CSSF, companies operating in the virtual currency sector (cryptocurrency or blockchain) are governed by the law on payment services, in the same way as traditional payment institutions.. The CSSF thus takes a homogenous look at anyone wishing to create a company in a financial activity, be it tangible, electronic or virtual (Bitcoin Cash ABC website). The approval of the Ministry of Finance is a prerequisite and the law is the same for everyone.
Virtual currencies are not tangible, as long as they are already accepted for the purchase of goods and services. The CSSF thus considers them as electronic currencies.
The legal status to create a company in the cryptocurrency sector
Approval to be obtained from the Ministry of Finance is issued only to legal persons of which the State of origin is Luxembourg. Candidates for the creation of a company in cryptocurrencies will also have to meet many other criteria in order to obtain approval (capital, revision, etc …).
Cryptocurrency, blockchain: luxembourg is a precursor in europe
Bitstamp, a major platform for the purchase and resale of virtual currencies in Europe, which provides Bitcoin among others, established its headquarters in Luxembourg last July after obtaining approval as a payment institution (April 26, 2017). This grail has opened the doors to the market of the 28 member states of the European Union. Accreditation, however, took two years to study its case by the Financial Sector Supervisory Commission (CSSF).
Bitflyer, a Japanese virtual money specialist, has also obtained approval and has been headquartered in Luxembourg since January 2017.
Through these two cases of schools, Luxembourg tends to show that it is a land of welcome for companies in the sector of virtual currencies and wishes to assert its dominant position in the world of fintech.