The Belgian financial regulator has confirmed its position that Bitcoin (BTC), Ether (ETH) and other cryptocurrencies issued solely by computer code do not constitute transferable securities.
The explanation came from the Belgian Financial Services and Markets Authority (FSMA) in a November 22 report, a draft of which was opened for comment in July 2022.
The clarification comes following an increase in requests for answers on how existing Belgian financial laws and regulations apply to digital assets, according to the FSMA.
Although not legally binding under Belgian or European Union law, the FSMA said that under its “step plan”, cryptocurrencies would be considered transferable securities if they were issued by a natural or legal person”:
“If there is no issuer, as in cases where the instruments are created by computer code and this is not done pursuant to an agreement between the issuer and the investor (for example, Bitcoin or Ether), then in principle the Prospectus Regulation, the Prospectus Law and the MiFID Rules of Conduct do not apply.
The Belgian regulator noted that cryptocurrencies that are not classified as securities may still be subject to other regulations if a business uses the digital asset 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.
The FSMA also noted that its phased plan is technology-neutral, suggesting that it is irrelevant that digital assets exist and are facilitated on a blockchain or through other traditional means.
The FSMA first drafted the report in July 2022 in order to answer frequently asked questions from Belgium-based issuers, offerors and service providers of digital assets.
The FSMA said the step-by-step plan would serve as a guideline until the adoption of the European Parliament’s Regulation on Crypto Asset Markets (MiCA), which is expected to come into force in early 2024.
Related: Not taking the time to learn about BTC is ‘Europe’s biggest risk’, says Belgian MP
Belgium’s clear guidelines contrast with the “regulation by enforcement” approach taken by the US Securities Exchange Commission (SEC), which is currently vying for regulatory control of digital assets with the Commodity Futures Trading Commission ( CFTC) of the United States.
While SEC Chairman Gary Gensler has long considered BTC to be a commodity, he recently argued that post-merger ETH and other staked coins could constitute security under the Howey test.
Belgium has not been a big adopter of digital assets to date, with a recent study by blockchain data platform Chainalysis ranking Belgium 94th in its Global Crypto Adoption Index.
Residents of the European country have access to 10 crypto exchanges, according to data from crypto data resource Bitrawr.