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 do so.

According to Cointelegraph, Luxembourg’s Director of the Treasury and Secretary General, Bob Kieffer, confirmed the investment in a LinkedIn post on 8 October.

He said Finance Minister Gilles Roth announced the decision during his presentation of the 2026 Budget at the Chambre des Députés, Luxembourg’s legislature.

“Recognising the growing maturity of this new asset class, and underlining Luxembourg’s leadership in digital finance, this investment is an application of the FSIL’s new investment policy, which was approved by Government in July 2025,”

Kieffer wrote.

The Intergenerational Sovereign Wealth Fund (FSIL) has invested about 1% of its holdings, roughly €9 million, into Bitcoin ETF products, based on its assets under management of €764 million as of 30 June.

The move comes despite Luxembourg’s earlier cautious stance on cryptocurrencies.

In May, the country’s 2025 risk report classified crypto firms as high-risk for money laundering, even as domestic institutions increased their engagement with digital assets.

Kieffer said the FSIL would continue to invest in equity and debt markets but is now permitted to allocate up to 15% of its assets to alternative investments, including cryptocurrencies, real estate, and private equity.

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

he added.

The new framework, introduced in late September, followed a mid-June review of the fund’s investment policy.

It was described as a “significant evolution” that reflects the fund’s growing maturity and aims to align with Luxembourg’s economic, social, and environmental priorities.

Kieffer said the 1% allocation was designed as a balanced approach:

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

Luxembourg’s decision follows similar developments in Europe.

Norway’s sovereign wealth fund, the world’s largest, increased its indirect Bitcoin exposure by 192% over the past year, while the Czech National Bank expanded its holdings in US crypto exchange Coinbase in July.

In Sweden, a member of parliament proposed a “budget-neutral” Bitcoin reserve earlier this year.

Featured image credit: Edited by Fintech News Switzerland, based on image by pvproductions via Freepik