Belgium’s financial regulatory body has confirmed its position that Bitcoin (BTC), Ether (ETH) and other cryptocurrencies issued solely by computer code are not securities.
The explanation came from the Belgian Financial Services and Markets Authority (FSMA) in a report dated November 22, a draft of which was opened for comment in July 2022.
The clarification follows an increase in demand for answers about how Belgium’s existing financial laws and regulations apply to digital assets, the FSMA said.
While not legally binding under the laws of Belgium or the European Union, the FSMA stated that according to its “roadmap” cryptocurrencies would be classified as a security if they were issued by any person or entity:
“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.”
The Belgian regulatory body noted that cryptocurrencies that are not categorized as securities may still be subject to other regulations if a company uses the digital asset 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 also noted that its roadmap is technology neutral – suggesting that it is irrelevant whether digital assets exist and are facilitated on a blockchain or through other traditional means.
The FSMA first prepared the report in July 2022 as a means to answer frequently asked questions from Belgium-based issuers, providers and service providers of digital assets.
The FSMA states that the roadmap will serve as a guideline until the European Parliament’s Markets in Crypto Assets Regulation (MiCA) is adopted, 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 guidance contrasts with the “regulation by enforcement” approach of the US Securities Exchange Commission (SEC), which is currently vying with the US Commodity Futures Trading Commission (CFTC) for scrutiny of digital assets .
While SEC Chairman Gary Gensler has long viewed BTC as a commodity, he recently argued that post-Merge ETH and other staked coins could constitute a security under the Howey test.
Belgium has not been a major user of digital assets to date, with a recent study by the 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 source Bitrawr.