Institutional interest in digital assets is rising alongside Bitcoin's mainstream acceptance and  growing investor demand. As a result, Luxembourg has emerged as a global hub. By fostering blockchain innovation and a progressive regulatory framework, Luxembourg can leverage its expertise in investment funds (IFs) to offer a robust, flexible ecosystem for tailored investment structures that support strategic investing in digital assets. The country’s pragmatic and clear regulatory framework empowers investment managers to create competitive and forward-thinking investment products that target digital assets.

How Deloitte can help

Get support on a wide range of investment topics:

• Digital asset-based business, product and corporate strategy
• Target operating model
• Regulatory license or notification filing
• Risk assessment and selection of crypto and blockchain related vendors
• Reporting
• Fund structuring (regulatory and tax)
• Tax structuring services (direct and indirect tax)
• On-going tax assistance
• Accounting and tax compliance
• Regulatory strategy
• Domiciliation and corporate secretary services
• Audit services

From the issuance of securities to their trading and post-trade servicing, tokenization is revolutionizing asset management through streamlined processes, enhanced efficiency, and improved distribution. Through smart contracts, tokenization unifies fragmented workflows and automates tasks like order processing, settlement, ownership tracking, and data management.

Key benefits include broader investor reach, improved liquidity, better collateralization, enhanced data management, and new revenue streams for issuers of financial instruments such as funds, bonds and derivatives. In the alternative investment space, tokenization simplifies investments, automates capital calls, and offers pre-term exit options, while blockchain ensures efficient, secure, and standardized processes.

In addition, through real world asset tokenization, blockchain technology increases investor access to assets all around the world as well as illiquid assets; this makes it easier to buy, sell, and trade smaller portions, thereby increasing market liquidity.

How Deloitte can help

Get support on a wide range of tokenization topics:

• Digital asset-based business, product and corporate strategy
• Business case for a new product, service or process
• Target operating model
• Regulatory license or notification filing
• Risk assessment and selection of crypto and blockchain-related
  vendors
• Structuring options for the platform or fund (regulatory and tax)
• Tokenization process
• On-going tax assistance
• Accounting, tax compliance, and reporting
• Regulatory framework
• Domiciliation and corporate secretary services
• Smart contract assurance
• Audit services

The Markets in Crypto Assets Regulation (MiCA) applies to issuers of crypto-assets and crypto-asset service providers (such as exchanges and custodians of a wide-range of tokens and coins) and offers legal clarity on guidelines, licenses, and requirements for providers that offer services to both individuals and institutions.

MiCA’s key provisions have helped position the EU as a leader in crypto regulation; these include disclosure of information, strict licensing requirements, risk management policies and AML/CTF processes. This framework enables emerging crypto firms to become fully licensed, enhancing credibility, and helps existing financial institution to expand services seamlessly. By harmonizing rules, MiCA supports innovation and regulatory clarity, and for that reason, many countries—Luxembourg especially—are more than happy to support its full adoption.

How Deloitte can help

Get support on several MiCA topics and other related regulations:

• Business, product and corporate strategy design that considers MiCA and other associated regulations, including:
  • The Luxembourg Blockchain Laws;
  • MiFID II; and the
  • DLT Pilot Regime.
• Business case development for a crypto-asset-based value proposition
• Target operating model
• Risk assessment and selection of crypto-asset service providers that comply with MiCA and DORA requirements
• License application or notification filing process with the local regulator(s)

On 17 October 2023, the Council of the EU adopted the eighth Directive on Administrative Cooperation, or “DAC8.” This directive amended EU tax regulations and expanded the framework to include crypto-asset transactions. It applies to service providers facilitating crypto transactions for EU customers and requires reporting and information exchange for direct tax purposes.

Aligned with OECD's CARF and MiCA, DAC8 involves a three-step process: conducting due diligence to identify reportable users, reporting annually to authorities by 31 January, and facilitating automatic information exchange. DAC8 rules will take effect on 1 January 2026, with first declarations due by 31 January 2027.

How Deloitte can help

Get advisory and compliance support for the following DAC8 topics:

• Reportable transaction scoping
• Gap analysis
• Registration with Luxembourg tax authorities
• Tax filing