The Luxembourg parliament has adopted Blockchain Law 4, which allows for the option to use a monitoring agent for digital securities issuance. The amendment aims to bring more flexibility to the country’s legal framework for digital securities and tokenisation.
The new regime is an optional one. It offers an alternative to the existing model, which requires a two-tier holding chain comprising both central and secondary account keepers. The first plays a role similar to CSDs in traditional finance (TradFi), while the second can be compared to custodians.
Under Blockchain Law 4, the monitoring agent is able to circumvent the existing two-layer process by using DLT in all its missions, including maintaining the issuance account, tracking the chain of title for securities, and reconciling issued securities. The closest comparison for the monitoring agent would be the crypto securities registrar under Germany’s Electronic Securities Act (eWpG).
