L-R: Wojciech Kozlowski, Business Development Director; Tomasz Matczuk, president of the supervisory board; Credit: Q Securities

Investment firm Q Securities has announced its plans to launch the first alternative fund investing entirely in crypto-assets in Luxembourg by summer 2022.

The first Luxembourg-domiciled fund investing fully in crypto-assets is expected to launch in less than six months, with the necessary regulatory and compliance work underway. 

"Following the latest CSSF FAQ document published at the beginning of the year and providing necessary guidance on crypto funds set-up and compliance requirements, we have informed the regulator about our intent to offer depositary services to crypto funds in Luxembourg", explained Tomasz Matczuk, president of the supervisory board of Q Securities, an investment firm acting as the depositary for Luxembourg-domiciled alternative investment funds (AIFs). "As far as we know, we are the first AIF depositary to have such an intention on the Luxembourg market".

Crypto-assets are digital assets covering a broad investment asset class comprising cryptocurrencies and other digital assets, objects whose value has been moved to blockchain. The market is soaring, with Chainalyst reporting a 567% year-on-year transaction volume growth to reach $15.8 trillion at the end of 2021. A recent survey by PwC Luxembourg and the Luxembourg House of Financial Technology (LHoFT) also showed that for more than half of respondents, crypto-assets already were or would become a strategic priority in the next 24 months.

"For quite some time, the cryptocurrency ecosystem was viewed by the financial industry and large corporations rather with scepticism, with the biggest concerns focusing on security, volatility and lack of regulations", said Wojciech Kozlowski, Q Securities Business Development Director. "But as soon as the regulation was introduced, we are seeing a sudden trend shift and a massive inflow of assets into the crypto universe".

With booming interest on the investor side, asset managers need to step up their crypto expertise, according to Q Securities, and hence crypto and blockchain job vacancies are exploding. Jobseeker platform Indeed.com reported that crypto and blockchain job openings had more than doubled in a year.

"The trend is clearly visible in Switzerland, Germany and the UK, and other cryptocurrency centres outside Europe. But as soon as the first crypto fund launches in Luxembourg, I expect that job offers in this sector will start to mushroom", added Mr Kozlowski. 

With the latest CSSF FAQ clarifying the rules for alternative asset managers to offer crypto assets, there has been a lot of movement in the industry, with many workgroups focusing on the subject. However, according to the PwC Luxembourg and LHoFT survey, a third of respondents believed Luxembourg was lagging behind most other countries in the European Union (EU).

"To catch up with Switzerland and Germany, Luxembourg should consider creating a legal framework for the opening of crypto banks or their branches. Even though legally you can use a foreign entity passporting to the Grand Duchy, it's a question of creating the image of the marketplace being truly crypto-friendly", noted Mr Kozlowski.

In 2021, Q Securities was the first investment firm in Luxembourg authorised to offer depositary services to alternative funds. Since then, it has expanded its expertise and will now also service crypto-asset funds.