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On February 4th 2026, the CSSF has published a new FAQ related to the exposure of Crypto-Assets in the UCITS funds. This change in orientation of the CSSF has been taken with enthusiasm by many players. The message that many understood was very simple: crypto on the UCITS funds is now allowed. From now on, UCITS investors will be exposed to crypto-assets. The reality is far from it.
Lets go straight to the point, your UCITS fund will probably not contain any exposure on crypto assets, and if it does, it will be limited to a very small range of UCITS-eligible instruments.
Despite the regulator’s best intentions, in practice this represents only a very limited change to the existing legal framework. Or, to put it differently, while the CSSF’s change in orientation is significant, from a practical and legal perspective, very little has actually changed. To understand why, it is necessary to look closely at how the CSSF has structured this change. In practice, it is more about setting very strict condictiones under which it may exist, rather than allowing crypto exposure.
To understand this, we need to carefully read the CSSF FAQ “Crypto-Assets – Undertakings for Collective Investment” published on February 4th. As stated in Question 1: for UCITS, such indirect investments in financial instruments with crypto-assets as an underlying are limited to transferable securities that do not embed any derivatives, in accordance with Article 10 of the Grand-Ducal Regulation of 8 February 2008.
This single sentence is key, as it effectively defines the conditions of what is possible, and what not.
It immediately excludes any direct investment in crypto-assets. Meaning, no Bitcoin, no Ethereum, and no other crypto-assets held directly in the portfolio.
At the same time, the requirement to invest only in transferable securities that do not embed derivatives significantly reduces the range of eligible instruments. In practice, this excludes a large part of the crypto-related financial products available on the market, leaving only a very limited number of crypto UCITS-eligible structures.
Transferable securities that do not embed any derivatives: this sentence reduces to a very large extent the use of crypto-assets in the UCITS portfolio. Indirect investments in financial instruments with crypto-assets as an underlying asset exclude a broad range of products where exposure is achieved through derivatives or non-linear structures. In particular, this includes futures-based ETFs and synthetic ETPs, all structured products such as autocallables, barrier certificates or crypto-linked notes, as well as leveraged or inverse ETPs. Pure derivative instruments, including futures, options and perpetual contracts on crypto-assets, are also excluded by definition.
In addition, shares of crypto-related companies, such as Coinbase or MicroStrategy, may be eligible as transferable securities, but they do not qualify as financial instruments with crypto-assets as an underlying, as they only provide indirect exposure through their business activities. In other words, shares of crypto-related companies are not equal to crypto exposure.
The CSSF has changed its orientation on crypto assets, and this is a big change. For many years, even considering crypto exposure within UCITS was a taboo, and this is where the real change stands. The regulator is now sending a clear message: crypto-assets can no longer be ignored. They matter and there is a willingness to start opening up to them. However, the new framework remains far from allowing UCITS funds to practically invest in crypto-assets.
Apart from the the legal framework, it is also worth looking at what this means in practice for UCITS managers.
In practice, a UCITS manager willing to gain even a small crypto exposure, needs to put quite a lot in place: identify eligible instruments (typically a very limited set of ETPs), perform enhanced due diligence on the structure and underlying crypto arrangements, assess specific risks such as volatility, liquidity and valuation, ensure the depositary is comfortable with the setup, update internal risk management and compliance frameworks and reflect all of this properly in disclosures and regulatory filings. All of this effort ultimately supports an exposure that cannot exceed 10% of the portfolio, which raises a legitimate question as to whether the operational burden is proportionate to the actual investment.
In practice, the 10% limit raises a very practical question: is it really worth building a full crypto risk, compliance and operational framework for what remains a marginal allocation within the portfolio?
For many managers, this may turn crypto exposure into a theoretical possibility rather than a practical investment choice.
In other words, while the CSSF has clearly changed its stance and opened the door to crypto-assets in UCITS, the practical reality remains largely unchanged: the access is possible, but only through a strict and highly constrained regulatory framework.
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The views and opinions expressed in this article are my own and do not reflect the official policy, position, or opinions of any financial institution, or other organization.
The content of this article is based on personal research of the author and understanding of AML (Anti-Money Laundering) and compliance topics.