The financial regulator in Belgium has confirmed its position that Bitcoin, Ethereum and other cryptocurrencies issued exclusively by computer code are not securities.
The explanation came from the Belgian Financial Services and Markets Authority (FSMA) in a report on 22 November, a draft of which was opened for comment in July 2022.
The clarification comes after an increase in requests for answers on how Belgium’s existing financial laws and regulations apply to digital assets, according to FSMA.
When are securities considered
Although not legally binding under Belgian or European Union law, FSMA stated that under its “plan”, cryptocurrencies are classified as securities if issued by an individual or entity:
“If there is no issuer, such as in cases where the instruments this happens by a computer and is not done when coding an agreement between the issuer and Ethereum), then the MiFID regulations and law will not apply”.
If it is a transaction instrument
The Belgian regulator noted that cryptocurrencies that are not categorized as securities may be subject to other regulations if a company uses the digital asset as a means of transaction:
“However, if the instruments have a payment or exchange function, other regulations may apply to the instruments or persons providing certain services related to them.”
It does not depend on the technology
FSMA also noted that its plan is technology-neutral, suggesting that it does not matter whether digital assets exist and operate on blockchain or through traditional means.
As a reminder, FSMA first compiled the report in July 2022 as a means of addressing frequent questions from Belgium-based issuers, providers and service providers of digital assets.
Until MiCA is implemented
As FSMA said, the draft will be used as a guideline until the 2024 regulation on cryptocurrency asset markets (MiCA), which is due to come into force in early 2024, is adopted.
Unlike the SEC
Belgium’s clear guidelines are in contrast to the “regulation through enforcement” approach adopted by the US Securities and Exchange Commission (SEC), which is currently asserting regulatory control of digital assets with the US Commodity Futures Trading Commission (CFTC).
While SEC chairman Gary Gensler has long considered BTC as a commodity, he recently argued that post-merger Ethereum and other cryptocurrencies may be securities under the Howey test.
In 95th place
Belgium is not seen as a huge hub of digital asset usage to date, with a recent study by blockchain data platform Chainalysis ranking it 94th in the Global Cryptocurrency Adoption Index.
Residents of Belgium have access to 10 cryptocurrency exchanges according to data from cryptocurrency data resource, Bitrawr.
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