Luxembourg’s Sovereign Fund Becomes First in Eurozone to Invest in Bitcoin ETFs

Luxembourg’s FSIL, a Eurozone sovereign wealth fund, has allocated 1% of its portfolio to Bitcoin ETFs, marking a regional first.

With total assets of $880 million, FSIL’s 1% allocation to Bitcoin ETFs amounts to roughly $9 million. Though modest in size, the move signals growing confidence in digital assets among European financial institutions.

Finance Minister Gilles Roth disclosed details of the investment during the presentation of Luxembourg’s 2026 Budget at the Chambre des Députés.

Policy Change Enables Crypto Exposure

This development follows the government’s approval of a revised investment policy in July 2025. The update allows FSIL to allocate up to 15% of its portfolio to alternative investments, including cryptocurrencies, private equity, and real estate.

However, the fund chooses ETFs instead of direct Bitcoin holdings to avoid custody and security risks. This approach provides regulated exposure while minimizing operational challenges.

“To avoid operational risks, the exposure to Bitcoin has been taken through a selection of ETFs,” Kieffer noted.

Strategic Diversification, Not Speculation

Kieffer described the decision as a balanced move rather than a speculative bet. He stated that the 1% allocation was carefully selected to align with FSIL’s risk profile and long-term strategy.

“This allocation strikes the right balance while signaling confidence in Bitcoin’s long-term potential,” he said.

Officials framed the move as part of FSIL’s broader goal to diversify income sources and support sustainable growth. The policy change also aims to help the fund address Luxembourg’s economic and environmental priorities.

Evolving Attitude Toward Digital Assets

Notably, the decision represents a shift in Luxembourg’s official stance on crypto. In May 2025, the country’s risk report labeled crypto firms as high-risk for money laundering. Despite that, local institutions have expanded their involvement in the digital economy.

By investing through ETFs, FSIL has chosen a controlled path that maintains compliance while testing opportunities in the digital asset space. This demonstrates Luxembourg’s ability to adapt policy without abandoning caution.

Crypto Interest Growing Across Europe

Meanwhile, Luxembourg’s decision adds momentum to a growing European trend. For instance, Norway’s sovereign wealth fund, the world’s largest, increased its indirect Bitcoin exposure by 192% last year.

Similarly, the Czech National Bank raised its stake in Coinbase, a U.S.-based crypto exchange, in mid-2025. In addition, a Swedish lawmaker proposed creating a Bitcoin reserve earlier this year.

Elsewhere, Finland, Georgia, and the United Kingdom also hold Bitcoin. Interestingly, most of those holdings came from criminal seizures, except Georgia, which owns 66 BTC as an investment asset.