Sébastien Schmitt, Partner Regulatory PwC

When BlackRock’s CEO Larry Fink made this statement earlier this year, it captured the scale of a transformation already in motion. In the United States, global asset managers such as BlackRock and JPMorgan have launched tokenised fund initiatives, while Nasdaq has submitted a filing with the SEC to allow trading of tokenised securities — including equities and exchange-traded products — as part of its platform. Such steps by systemic actors shows how fast tokenisation is becoming part of regulated markets — and how close we are to a new phase of financial innovation.

In Europe, the first UCITS money market fund has been tokenised and approved by the CSSF in Luxembourg earlier this year — confirming that Europe, too, is moving in this direction.

Over the past few years, Luxembourg has progressively developed a comprehensive regulatory toolbox through successive blockchain laws, providing the legal certainty needed for such initiatives. This forward-looking approach places the country in a strong position to host and enable the next generation of tokenised investment funds.

Tokenisation & benefits

Tokenisation refers to the digital representation of financial instruments on a distributed ledger such as blockchain. In the context of investment funds, it means that fund units are recorded and transferred using this technology instead of traditional registries or intermediaries. The fund itself remains subject to the same regulatory framework — what changes is the infrastructure supporting issuance, record-keeping, and transfer.

For asset managers and service providers, tokenisation has the potential to bring operational efficiency: faster processing of subscriptions and redemptions, reduced reconciliation efforts, and simplified transfer-agent workflows. It can also open the door to broader investor access through fractional ownership and potentially faster cross-border distribution.

Beyond efficiency, blockchain technology enhances transparency and traceability across the fund’s lifecycle, strengthening investor confidence and auditability. In short, tokenisation offers a modern, resilient infrastructure that can make investment funds more efficient, accessible, and aligned with the digital expectations of tomorrow’s investors.

Luxembourg toolbox

Luxembourg has progressively established one of the most advanced legal and regulatory frameworks in Europe to enable tokenised financial instruments. Through a series of blockchain laws adopted since 2019, the country has clarified how distributed ledger technology can be used for the issuance and transfer of securities, including fund units. Each law has added a new layer of legal certainty, culminating with the Blockchain Law IV, adopted in December 2024.

This latest reform introduced the concept of a control agent — a regulated entity responsible for verifying and supervising transactions recorded on the distributed ledger. The role of the control agent strengthens trust between market participants by ensuring that on-chain operations remain consistent with off-chain legal and operational realities. According to the law, this function can only be carried out by a credit institution, an investment firm, or a clearing and settlement organisation authorised in Luxembourg or in another EU Member State.

Together, these measures provide Luxembourg with a complete and pragmatic toolbox for tokenised funds: a clear legal basis, defined governance responsibilities, and a regulator open to innovation within a sound, supervised environment.

Call to Action

Tokenisation is no longer a distant concept — it is a global movement gaining pace, with major asset managers and infrastructures already taking decisive steps. Luxembourg has the legal framework, regulatory openness, and ecosystem needed to play a leading role. But momentum will not wait. Those who move first will shape how the next generation of investment funds is built — and Luxembourg has every reason to be among them.