Gilles Roth: the finance minister presented the government’s 2026 budget (inset) on 8 October | Credit: Ministry of Finance Luxembourg

Luxembourg’s sovereign wealth fund has allocated one per cent of its portfolio to bitcoin, the European Union (EU) member state’s finance minister has announced.

Gilles Roth mentioned the Intergenerational Sovereign Wealth Fund (Fonds souverain intergénératiponnel du Luxembourg – FSIL)’s lean into the world’s best-known cryptocurrency as part of his presentation of the government’s draft 2026 state budget on 8 October.

FSIL is a public institution under the authority of the minister of finance. Its mission is to ‘make savings whose income can be used, under certain conditions and within certain limits, to contribute to the wellbeing of future generations.’

FSIL had just under €745 million (about £648 million) in total assets on 30 June 2025, according to its mid-year financial report. The fund is expected to grow steadily through annual contributions (minimum €50 million/year, indexed to inflation) and investment returns. One per cent of €745 – that is to say, the bitcoin allocation – is €7.45 million (about £6.48 million).

“With 15 per cent of allocated capital in alternative investments, including one per cent already allocated to bitcoin, the fund’s total assets will amount to €850 million [about £740 million] by the end of 2026,” Roth said (our translation into EN from French) as he presented the budget.

Luxembourg’s move is the first time a sovereign wealth fund within the 20-member eurozone has invested in bitcoin, according to Luxembourg for Finance (LFF – a public-private partnership, chaired by the finance minister, between the Luxembourg state and financial industry federation PROFIL).

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Investing via ETFs

Luxembourg has a population of just 650,000 but is a prominent financial centre and home to numerous EU institutions and agencies, including the European Investment Bank (EIB). The country is bordered by France, Germany and Belgium.

FSIL’s current ‘general policy’ was approved by the government three months ago (July 2025) and ‘marks a significant change compared to the one drawn up in 2015 when the fund was launched,’ FSIL’s webpage states.

‘This new iteration takes into account the maturity reached by the fund and the need to better respond to the country’s economic, societal and environmental priorities, while respecting the mission of building savings for the benefit of future generations,’ it adds.  

Changes have involved: a reduction of the weight of bonds (from 57 per cent to 32 per cent); increase in the weight of equities (from 40 per cent to 50 per cent); and the introduction of an allocation to ‘alternative assets’ (up to 15 per cent), including: private equity (10 per cent) – ‘particularly in the technology and defence sectors’; real estate (four per cent) – with the aim of supporting the Luxembourg housing market; and cryptoassets, ‘especially’ bitcoin (one per cent) – ‘as an emerging asset class’.

LFF said that ‘to avoid operational risk, the investment in bitcoin is made through a selection of exchange-traded funds (ETFs)’ – investment funds that hold a basket of assets.

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Luxembourg’s ‘serious’ crypto push

‘By becoming the first eurozone government to invest part of its reserves in bitcoin, Luxembourg once again demonstrates its commitment to support emerging and future-oriented investment trends,’ LFF stated in its online post.

‘By far the largest centre in Europe for alternative investment funds, Luxembourg is also fast becoming the hub for serious crypto firms under the European Markets in Crypto-Assets regulation,’ it continued.

The EU’s Markets in Crypto-Assets Regulation (MiCA/MiCAR) is a comprehensive framework aimed at harmonising the regulation of crypto-assets and related services across the 27-member bloc.

‘More broadly, Luxembourg’s financial centre aims to position itself as a leading European hub for digital assets,’ the LFF continued, going on to highlight private-sector investments by global banks including HSBC and Standard Chartered, as well as US-headquartered crypto exchange Coinbase.

Coinbase announced in June that it had secured its MiCA licence from Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF), enabling the company to offer its ‘full suite of crypto products’ to all 27 EU member states. It praised Luxembourg as ‘actively pursuing a whole-of-government approach to blockchain and distributed-ledger technology (DLT)’, adding that the country ‘has passed four blockchain-related policies through the national legislature’. (Blockchain is the best-known example of DLT; blockchain is the underlying technology that powers most cryptocurrencies).

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Crypto: opinion divided

Public sector investment in cryptocurrency is a topic with an increasing profile – and a strategy whose merits divides opinion.

In January this year European Central Bank president Christine Lagarde said that “bitcoin will not enter the reserves of any of the central banks of the [EU]”. She was speaking at a press conference when asked to respond to a media report that the governor of the Czech National Bank (CNB), Aleš Michl, was exploring the possibility of adding bitcoin to the CNB’s reserves.

Outside the EU arguably the highest profile state investor in bitcoin is the Central American nation of El Salvador. El Salvador’s National Bitcoin Office has continued to buy the cryptocurrency, despite moves by the International Monetary Fund (IMF) to curtail the government’s extensive involvement with bitcoin across various initiatives.

In the US, president Donald Trump signed an executive order in March to create a ‘Strategic Bitcoin Reserve’ and ‘Digital Asset Stockpile’.

‘Bitcoin is the original cryptocurrency,’ a ‘Background’ section of the executive order stated. ‘The Bitcoin protocol permanently caps the total supply of bitcoin (BTC) at 21 million coins and has never been hacked. As a result of its scarcity and security, Bitcoin is often referred to as “digital gold”. Because there is a fixed supply of BTC, there is a strategic advantage to being among the first nations to create a strategic bitcoin reserve.’

The Strategic Bitcoin Reserve would be capitalised with Treasury Department-owned bitcoin that has been forfeited through criminal or civil asset forfeiture proceedings, the order explained. Other government agencies were required to evaluate their legal authority to transfer across any bitcoin they may have. The Digital Asset Stockpile, meanwhile, is intended to be ‘a secure account for orderly and strategic management’ of the US’s ‘other digital asset holdings’: non-bitcoin crypto.