BTC, ETH or any other cryptocurrency generated by computer code is not classified as securities by any Belgian regulatory body.
Belgian regulator addresses concerns
Belgian Financial Services and Markets Authority (FSMA) released a report on November 22 that addressed the question: Are cryptos securities? According to the regulatory body, Bitcoin, Ether and other cryptocurrencies are issued solely by computer code and are not considered securities.
An excerpt from the report reads:
“If there is no issuer, such as in cases where instruments are created by computer code and not in execution of an agreement between issuer and investor (e.g. Bitcoin or Ether), then in principle the Prospectus Regulation, the Prospectus Regulation The law and the MiFID rules of conduct do not apply.”
There are growing questions about where digital assets fall under the country’s existing financial laws and regulations. The above-mentioned report clarified in response to these increasing questions about the classification of cryptocurrencies under Belgian law.
The Roadmap of the FSMA
The FSMA has also stated that it will include cryptocurrencies as a security in its “roadmap” if they are issued by a person or entity. However, the roadmap is not affected by the technology behind such assets. Simply put, it doesn’t matter if the digital assets exist or are facilitated on a blockchain or other traditional ways. The European Parliament’s Markets in Crypto Assets Regulation (MiCA) will be adopted across the continent around the start of 2024. Until then, the regulatory framework for this asset will be provided by the roadmap established by the FSMA report.
Moreover, even if the cryptocurrencies are not categorized as securities, they will be subject to different regulations if used as a medium of exchange.
“Nevertheless, if the instruments have a payment or exchange function, different rules may apply to the instruments or to the persons providing certain services in relation to those instruments.”
FSMA and SEC – Two different approaches
The regulator’s report further states that transferable instruments with an issuer must provide detailed information to potential investors. In such cases, the EU legislation on the Markets in Financial Instruments Directive or MiFID will act to prevent conflicts of interest. But since cryptos like Bitcoin don’t have a specific issuer, the law doesn’t apply to them. This outspoken stance on crypto is in stark contrast to the perspective of the US counterpart of the FSMA. The US Securities and Exchanges Commission (SEC) has taken a very “regulation by enforcement” approach to digital assets and has also taken crypto companies to court over claims that cryptos must be registered as securities.
Disclaimer: This article is for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.