DeutschWith Luxembourg, the first EU country announces the start of its Bitcoin investment. The sovereign wealth fund FSIL has already invested 7.64 million euros in BTC. They are convinced of the cryptocurrency’s maturity and long-term utility. According to public information, the Grand Duchy is now the eighth-largest state BTC buyer in the world.
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First EU Country Buys Bitcoin: how much Luxembourg is Investing
Luxembourg is the first EU country to announce its own investments in Bitcoin. Bob Kieffer, Chairman of the Luxembourg Treasury, announced the investment on Wednesday via LinkedIn. Finance Minister Gilles Roth has announced a new investment strategy.
Luxembourg’s move could certainly have a signaling effect in the European Union. So far, the Baltic states of Lithuania and Estonia have stood out within the Union as supporters of cryptocurrencies. No member state has announced investments in crypto so far.
The Luxembourg sovereign wealth fund FSIL already invested one percent of its volume in Bitcoin as planned, Kieffer explained. While they are aware of the small scale, they have classified the investment as sufficient.
“Some may argue that we are investing too little and too late; others will point to the volatility and speculative nature of the investment,” Kieffer wrote.
“Given the specific profile and mission of FSIL, however, the Fund’s Board of Directors concluded that a one percent allocation represents the right balance while sending a clear message about Bitcoin’s long-term potential,” it continued.
FSIL has a total value of 764 million euros. Accordingly, Luxembourg is likely to have acquired Bitcoin worth 7.64 million euros – at the current market value of 104,933 euros (121,410 US dollars), this corresponds to 72.8 BTC.
In international comparison, Luxembourg thus overtakes Georgia and is therefore the eighth-largest of nine publicly known state Bitcoin investors.
Kieffer did not describe the new investment as a Bitcoin reserve, but the concept is ultimately the same. States like the USA and El Salvador publicly announced the launch of a so-called Bitcoin reserve in the past.
Sovereign Wealth Fund Calls Bitcoin Mature
Despite the relatively small investment, the Luxembourg sovereign wealth fund expresses enthusiasm for Bitcoin in its statement. The largest of all cryptocurrencies is a mature investment, Kieffer’s statement says.
In July, the Luxembourg government confirmed a new investment concept, whereby FSIL will henceforth consider several alternative asset classes.
“Given the increasing maturity of this new asset class and emphasizing Luxembourg’s leadership role in the digital financial economy, this investment is an implementation of FSIL’s new investment policy,” Kieffer wrote.
Besides Bitcoin, FSIL is now also investing in private equity and real estate. Previously, all funds flowed into stocks and bond markets. 15% of the portfolio is now earmarked for the three alternative asset classes.
Why Institutions Primarily Invest in ETFs
FSIL does not invest directly in Bitcoin, but through ETFs. This concept is very popular among institutions. On the one hand, they often meet regulatory requirements, and on the other hand, they benefit from the security of the exchange.
Investors like the Luxembourg sovereign wealth fund want to avoid operational errors with investments in crypto ETFs. FSIL therefore does not trust itself with the independent custody of Bitcoin.
“To avoid operational risks, the investment in Bitcoin was made through a selection of ETFs,” Kieffer wrote. Which ETFs are used remains unmentioned.
Kieffer added an image to his statement showing an illustration of Luxembourg. Bitcoin is prominently displayed above the country. The foreground features the saying “It might make sense just to get some in case it catches on”, with which inventor Satoshi Nakamoto promoted Bitcoin in 2009 via an email.
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