Notice to private consumers in the context of investment funds providing exposure to virtual assets
The Commission de Surveillance du Secteur Financier (CSSF) notes that virtual assets, including so-called virtual currencies, continue to gain traction in the financial sector. This market trend can also be observed in the context of collective investment undertakings (investment funds) being established to provide direct or indirect exposure to such virtual assets. In this context, the CSSF reminds that concise answers to the main practical issues faced by market players of the fund industry are included in the CSSF’s FAQ – Virtual assets (UCIs). This document also provides clear guidance regarding the conditions to be complied with by funds and their managers (as the case may be) when investing in virtual assets.
As an integral part of its mission, the CSSF hereby informs consumers that material exposure to virtual assets may in some instances be gained through investment funds (and, where applicable, the managers thereof) that are not subject to any prudential supervision. In consequence, the CSSF would like to draw consumers’ attention to the fact that the risks associated with an investment in virtual assets (as outlined in the document Warning regarding virtual currencies), coupled with the absence of any prudential supervision by the CSSF of the relevant funds, should therefore be very carefully considered by consumers as this potentially translates in a lesser level of investor protection.
Finally, before considering any investment in virtual assets, including but not limited through an investment in investment funds, consumers should familiarise themselves with such assets and perform their own research in order to fully understand the risks associated with such an investment. Further guidance on the specific risks associated with any investment in virtual assets and the minimum steps to perform before considering investing in virtual assets may be found in the communiqué published on 27 April 2022 on the CSSF website. This guidance on the specific risks provided in that communiqué is also applicable in relation to exposure through an investment in an investment fund, which potentially might not be subject to any prudential supervision.