BTC, ETH or any other cryptocurrency generated by computer code is not classified as a security by any Belgian regulatory body.
Belgian regulator responds to concerns
Belgian Financial Services and Markets Authority (FSMA) published a report on November 22, which addressed the question – are cryptos securities? According to the regulator, since Bitcoin, Ether, and other cryptocurrencies are issued only by computer code, they are not considered securities.
An excerpt from the report says,
“If there is no issuer, such as in cases where instruments are created by computer code and this is not done pursuant to an agreement between issuer and investor (e.g. Bitcoin or Ether), then in principle the Prospectus Regulation, the Prospectus Law and the MiFID Rules of Conduct do not apply.
More and more questions arise as to where digital assets fall under the country’s existing financial laws and regulations. The aforementioned report provided clarifications in response to these growing questions about the classification of cryptocurrencies under Belgian law.
FSMA progressive plan
The FSMA has also said that it will include cryptocurrencies as security under its “phased plan” if they were issued by a person or entity. However, the staged plan will not be affected by the technology behind these assets. Simply put, it doesn’t matter if the digital assets exist or are facilitated on a blockchain or through other traditional means. The European Parliament Regulation on Crypto Asset Markets (MiCA) will be adopted across the continent around early 2024. Until then, the regulatory framework for this asset will be provided by the staged plan chartered by the report of the FSMA.
Additionally, even though cryptocurrencies are not categorized as securities, they will be subject to other regulations if used as a medium of exchange.
“However, if the instruments have a payment or exchange function, other regulations may apply to the instruments or to the persons who provide certain services relating to these instruments.
FSMA and SEC – Two different approaches
The regulator’s report further clarifies that transferable instruments with an issuer must provide detailed information to potential investors. In such cases, EU law on markets in financial instruments or MiFID will come into action to prevent conflicts of interest. But since cryptos like Bitcoin do not have a particular issuer, the law does not apply to them. This clear-cut attitude towards crypto stands in stark contrast to the perspective taken by the US counterpart of the FSMA. The US Securities and Exchanges Commission (SEC) has taken a very “regulated by enforcement” approach to digital assets and has also taken crypto companies to court over allegations that cryptos should be registered as than securities.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended for use as legal, tax, investment, financial or other advice.