Key Takeaways
- • Q Securities, a Warsaw-headquartered fund services provider, told the CSSF it has filed paperwork expressing its intent to offer depositary services to crypto funds in Luxembourg, which it says would be the first AIF depositary to do so on the Luxembourg market.
- • Q Securities expects the first Luxembourg-domiciled fund investing fully in crypto assets to launch in less than six months, with regulatory and compliance work underway and a possible summer 2024 debut.
- • Q Securities currently holds EUR17bn in assets under custody and serves 220 alternative investment funds, focusing on smaller and mid-sized institutional and professional funds.
- • Global competitors are moving into digital asset services, including State Street's plan to offer digital asset custody through a partnership with Copper.co and Clearstream's support for crypto-linked finance products.
Summary
Fund services provider Q Securities said it expects the "first Luxembourg-domiciled fund investing fully in crypto assets" to launch in less than six months, and that it plans to provide depositary services to crypto investment funds. The company was set to announce that it had filed paperwork with the Luxembourg Financial Sector Supervisory Commission (CSSF) outlining its "intent to offer depositary services to crypto funds in Luxembourg." Tomasz Matczuk, chairman of the Q Securities supervisory board, said the company believes it is the first AIF depositary to have such an intention on the Luxembourg market. Q Securities attributed the emergence of crypto-oriented funds in part to CSSF guidelines issued at the beginning of the year.
According to Q Securities, investors can currently gain crypto exposure only directly through dedicated exchanges or crypto-trading platforms, or indirectly through instruments such as ETFs. A regulated investment fund would allow indirect investment overseen by an asset manager. Wojciech Kozlowski, business development director at Q Securities, said investors would no longer need to make real-time buy and sell decisions on their crypto positions.
Q Securities will focus on smaller and mid-sized funds serving institutional and professional investors, as larger industry names often reject funds below a certain threshold for profitability reasons, according to Matczuk. Kozlowski expects crypto funds to drive job growth in Luxembourg, anticipating strong demand for experienced bankers and fintech professionals once the first fund launches.
Q Securities received authorisation last year to provide depositary services to Luxembourg alternative investment funds, becoming the first investment firm granted this license in the grand duchy. It reports EUR17bn in assets under custody and 220 served funds, and is not authorised to serve UCITS retail funds. The firm began as a brokerage in 2012, entered alternative fund depositary business in 2016, expanded to Luxembourg in 2020 and onboarded its first Luxembourg client in 2021.
The article notes competitive pressure from larger players. State Street said earlier in the month it planned to offer digital asset custody after a partnership with London-based Copper.co. Clearstream supports cryptocurrency-linked finance products and holds a stake in FundsDLT, a fund distribution platform built on blockchain technology. The article also cites Chainalysis, which reported total cryptocurrency transaction volume of $15.8trn in 2021, up 567% from 2020, and Blockdata, which reported $223bn in cryptocurrency assets under custody in January. Coinhouse, a French firm, has already obtained CSSF custody services authorisation.
According to Q Securities, investors can currently gain crypto exposure only directly through dedicated exchanges or crypto-trading platforms, or indirectly through instruments such as ETFs. A regulated investment fund would allow indirect investment overseen by an asset manager. Wojciech Kozlowski, business development director at Q Securities, said investors would no longer need to make real-time buy and sell decisions on their crypto positions.
Q Securities will focus on smaller and mid-sized funds serving institutional and professional investors, as larger industry names often reject funds below a certain threshold for profitability reasons, according to Matczuk. Kozlowski expects crypto funds to drive job growth in Luxembourg, anticipating strong demand for experienced bankers and fintech professionals once the first fund launches.
Q Securities received authorisation last year to provide depositary services to Luxembourg alternative investment funds, becoming the first investment firm granted this license in the grand duchy. It reports EUR17bn in assets under custody and 220 served funds, and is not authorised to serve UCITS retail funds. The firm began as a brokerage in 2012, entered alternative fund depositary business in 2016, expanded to Luxembourg in 2020 and onboarded its first Luxembourg client in 2021.
The article notes competitive pressure from larger players. State Street said earlier in the month it planned to offer digital asset custody after a partnership with London-based Copper.co. Clearstream supports cryptocurrency-linked finance products and holds a stake in FundsDLT, a fund distribution platform built on blockchain technology. The article also cites Chainalysis, which reported total cryptocurrency transaction volume of $15.8trn in 2021, up 567% from 2020, and Blockdata, which reported $223bn in cryptocurrency assets under custody in January. Coinhouse, a French firm, has already obtained CSSF custody services authorisation.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.