On 21 January 2022, Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF) published a non-binding document, a “white paper”, aiming to guide interested professionals in the conduct of their due diligence process related to the Distributed Ledger Technologies (DLT) and its use in the provision of services in the Luxembourg financial sector.

The current white paper, primarily targets professionals being financial and non-financial institutions providing or intending to provide services to the Luxembourg financial sector. This non-binding document invites any stakeholder to consider the concrete implications of the use of a DLT in the provision of its services. The purpose is to ensure that both risks and advantages are adequately and appropriately taken into consideration by the financial sector.

It is noted that CSSF applies a principle of technology neutrality and acknowledges that innovative processes and technologies can contribute to improvement of the provision of financial services. CSSF points out that is essential that professionals conduct a proper risk assessment when developing, providing, using or implementing a DLT. These risks must be clearly identified, mitigated and monitored throughout the entire life cycle of the DLT use.

The white paper aims to:

• Identify the key components of a DLT and the different types of DLT available;
• Highlight the roles and responsibilities of the different actors in the use of a DLT; and
• Emphasize some of the main risks related to the DLT, both in terms of governance and technical risks.

The white paper can be found here.

CSSF’s communication and press release can be found here and here