The Belgian financial regulator confirmed its position that bitcoin (BTC), ether (ETH) and other cryptocurrencies issued by a single computer code are not securities.
The Belgian Financial Services and Markets Authority (FSMA) gave the explanation in a report on 22 November, the draft of which was submitted in July 2022 for comments.
This clarification follows 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 cryptocurrencies would be classified as a security under its “phase-in plan” if an individual or entity issued:
“If there is no issuer, as in cases where the instruments are created with 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 Regulation the Prospectus, the Prospectus Law and the MiFID Conduct Rules do not apply. “.
The Belgian regulator noted that cryptocurrencies that are not yet categorized as securities may be subject to other regulations, if a company 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 providing certain services related to those instruments. “.
The FSMA also noted that its phasing plan is technology neutral, implying that it does not matter whether digital assets exist and are transmitted on a blockchain or through other traditional means.
The FSMA first drafted the report in July 2022 to answer common questions from issuers, providers and service providers of digital assets located in Belgium.
The FSMA said the phased plan will act as a guideline until the adoption of the European Parliament’s digital asset markets (MiCA) regulation, which is expected to come into force in early 2024.
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Belgium’s clear guidelines contrast with the ‘regulation by enforcement’ approach taken by the US Securities Exchange Commission (SEC), which is currently trying to regulate digital assets with the US Commodity Futures Trading Commission (CFTC ).
While SEC Chairman Gary Gensler has long considered bitcoin to be a commodity, he recently argued that ether and other cryptocurrencies, which are in question after the Merger Upgrade, can be considered securities under the Howey test.
Belgium has not been a big adopter of digital assets so far, with a recent study by blockchain data platform Chainalysis ranking the country 94th in its global cryptocurrency adoption index.
Residents of this European country have access to 10 cryptocurrency exchanges according to data from crypto data resource Bitrawr.