Virtual Currencies And Initial Coin Offerings

The CSSF (Commission de Surveillance du Secteur Financier) has recently published two warnings on its website regarding in particular the significant risks linked to investments in initial coin offerings ("ICOs") and tokens and virtual currencies (also called "VCs", "cryptocurrencies" or "virtual money").

As the CSSF considers these investments to be unsuitable for all types of investors and investment objectives, they prohibit direct and indirect investments in virtual currencies and/or tokens through ICOs by UCITS, UCIs addressing non-professional customers1 and by pension funds. Only investment funds restricted to professional investors are therefore allowed to invest directly or indirectly in these investments provided that they take into account the relevant risks identified by the CSSF.

The CSSF highlights in particular the fact that virtual currencies and ICOs are not subject...