On 2 October 2026, the CSSF published a new FAQ on fund tokenization. It was something already expected by the fund industry. The FAQ confirms that Luxembourg investment funds can issue tokenized units or shares directly on distributed ledger technology and that can also be used to maintain the unit-holder or shareholder register.
Digital & Virtual Assets
Tokenized Funds: Could the Transfer Agent role be reduced?
Luxembourg’s new CSSF FAQ shows that the main limit to a fully tokenized fund may no longer be technology, but regulation.
By Diego Ofano 5 min read
The real point of the FAQ is that, the new CSSF approach also creates an interesting paradox. If DLT can already record issuance, ownership, transfers and positions, and this is well accepted by the regulator, the question I would rise today is: how much of today transfer agent infrastructure remains operationally necessary, rather than only a legal requirement.
DLT can already do much of the work
The DLT technology is really straightforward: it can maintain a record of fund units from the moment they are issued, it can record ownership changes and transactions and make the same information available to the AIFM, RC, Board Members, depositary, and regulator as well. This can reduce the need for all these parties mentioned above to maintain separate databases and then reconcile them.
We are going to a direction where the future function of the TA might be reduced, simply because the CSSF FAQ accepts now two things: native tokenized units and the use of the DLT in the register. In other words, a part of the work that justified the TA function can now be performed differently through technology. If in the future, the DLT will also be able to integrate, onboardings, investor records, sub/red, restrictions, e reconciliation, at that point the regulator could really wonder if the functions performed by the TA today should not be performed in a different way.
The discussion becomes more interesting if we imagine a fund fully designed from the beginning around DLT/Blockchain technology. From practical point of view, the investor onboarding could take place digitally, with verified investor information connected to the investor profile. Subscription and redemption orders could be submitted through the same infrastructure. Fund units could be issued directly on the ledger, and ownership could be recorded immediately.
The same system could maintain transaction history and investor positions and provide access to the AIFM, depositary, administrator and other authorized parties. Certain transfer restrictions or investor eligibility rules could also be applied automatically.
In such a model, the same data would no longer need to move across several systems before being reconciled again. At that point, the question becomes very practical: what still needs to be performed by a separate transfer agent?
The functions remain, but the model could change
Obviously subscriptions and redemptions would still need to be processed correctly, investor eligibility would still need to be checked, records would still need to be reliable and AML and sanctions obligations would continue to apply.
There would also still be situations where automation is not enough. Errors, unusual transactions, changes in investor circumstances and other exceptions would still need to be reviewed and resolved.
The entire Fund sector is trying to automate more and more tasks. Every day we see new solutions to automate tasks inside the AIFM, the depositary and the central administration. In my opinion, the transfer agent will follow the same direction. The ones that will survive are the ones that understand the change is already happening and adapt their technology fast enough. Today, the main thing slowing this change is not the technology, but the regulatory framework. The fund (still) must appoint a Central Administration.
In my opinion, the role of the transfer agent could become more focused on oversight, control and exception management, while more of the daily work is automated.
What the CSSF FAQ says today
The CSSF FAQ, however, does not remove the existing registrar function. For dematerialized units or shares, a may be part of the structure, but the CSSF makes clear that this does not replace all the functions performed by the acting as registrar.
The FAQ also confirms that DLT can be used both to issue fund units and to maintain the register. It also allows traditional and tokenized units to be handled through different registrar arrangements, as long as responsibilities are clear and there is one consolidated view of all units or shares issued.
This is important because the CSSF is allowing the technology to change, while keeping the same regulatory responsibilities in place. The infrastructure is evolving, but the relevant regulated entities still remain responsible for the functions around it.
In my opinion, this is only the beginning of the discussion. The fund industry is already moving towards more automation at every level, and the transfer agent will likely follow the same direction.
The real question is how much of the daily operational work can eventually be automated or integrated into the DLT infrastructure itself.
If this happens, the role of the transfer agent may become more focused on oversight, controls and exceptions, while the technology will work more on the standard processing.
Source
CSSF – FAQ on Tokenization, published 2 October 2026.
The FAQ should be read together with the other legal and regulatory requirements applicable to the relevant fund and service providers.
This article is for general information only and does not constitute legal or regulatory advice.