Luxembourg Sovereign Wealth Fund Allocates 1% to Bitcoin ETFs

Luxembourg’s sovereign wealth fund has allocated 1% of its portfolio to Bitcoin exchange-traded funds (ETFs), becoming one of the first European state-backed investment entities to gain exposure to Bitcoin.

The move was confirmed by Bob Kieffer, Director of the Treasury and Secretary General, who shared the update on LinkedIn. He said Finance Minister Gilles Roth disclosed the decision during his presentation of the 2026 Budget at Luxembourg’s Chambre des Députés.

“Recognizing the growing maturity of this new asset class, and underlining Luxembourg’s leadership in digital finance, this investment reflects the FSIL’s new investment policy approved by the Government in July 2025,” Kieffer wrote.

The Intergenerational Sovereign Wealth Fund (FSIL) reportedly invested about $9 million into Bitcoin ETFs, representing 1% of its roughly €764 million ($888 million) in assets under management as of June 30.

New Framework and Policy Shift

The investment follows the adoption of a new investment framework in late September, allowing FSIL to allocate up to 15% of its assets to alternative investments, including crypto, real estate, and private equity. However, direct holdings of cryptocurrencies were deemed “too operationally risky,” prompting exposure through regulated ETFs instead.

The move signals a strategic evolution in Luxembourg’s stance toward digital assets, despite a May 2025 risk report labeling crypto firms as “high-risk” for money laundering.

Kieffer described the decision as a balanced and forward-looking step, acknowledging mixed reactions within financial circles:

“Given FSIL’s profile and mission, a 1% allocation strikes the right balance while sending a clear message about Bitcoin’s long-term potential.”

Luxembourg joins a growing list of state-affiliated institutions cautiously entering the crypto sector — following similar developments from Norway’s sovereign wealth fund and reports of other European entities increasing indirect Bitcoin exposure.