Regulatory guide – Faced with an increasing number of questions on the application of financial rules to crypto-assets, the Financial Services and Markets Authority (FSMA) of Belgium has attempted to clarify the criteria used to be able to determine whether or not a cryptocurrency is considered as transferable securities.
Bitcoin and Ether: not a security in Belgium
In a communication dated November 22, the Financial Services and Markets Authority specified that the Prospectus Regulation, the Prospectus Law, and the rules of conduct of the Markets in Financial Instruments Directive (MIFID), did not apply to Bitcoin and Ether. In simpler terms, these cryptocurrencies are not securities.
In addition to Bitcoin and Ether, this remark is valid for all cryptocurrencies that have no no transmitters. To illustrate these cases, the FSMA gives the example of a financial instrument which is created by a computer code and which “is not made in execution of an agreement between the issuer and the investor”.
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Cryptocurrencies will be subject to another regulation
However, the FSMA points out that when these “instruments”, and therefore cryptocurrencies in this case, have a “payment or exchange function”, then they may be subject to ” other regulations “. The latter may apply to cryptocurrencies or to the persons (natural or legal) who provide the services which are “linked to these instruments”.
The FSMA also indicates that this classification as a transferable security or not of a cryptocurrency does not depend on technology used. The previous rules therefore apply, regardless of whether a cryptocurrency is issued by a blockchain or by another decentralized system.
Crypto businesses in Belgium now have a guide to help them determine the regulations, to identify the laws that apply or not to cryptocurrencies. Regulatory clarity is necessary for the development of the crypto industry and to avoid legal standoffs similar to the one between the SEC and Ripple.
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