The Financial Services and Markets Authority (FSMA), the Belgian regulator, requests comments on its communication regarding the classification of crypto assets as securities, investment instruments or financial instruments. Aimed at issuers, bidders and service providers, the body’s communication will serve as a guide to the current legislation until European regulatory harmonization is achieved.
The communication aims to answer frequently asked questions and is not exhaustive. It is accompanied by a table of stages to help determine the classification of the asset.
Crypto assets that are incorporated into an instrument, as is often the case with interchangeable or fungible assets, may be classified as securities under the European Union (EU) Prospectus Regulation or as investment instruments under the Act on the EU Prospectus. In such cases, the MiFID (Markets in Financial Instruments Directive) rules of conduct apply.
If an asset has no issuer, as in the case of Bitcoin or Ether, where the instruments are created by computer code that does not give rise to a legal relationship, then, in principle, the Prospectus Regulations, the Prospectus and MiFID rules. When the European Union Regulation on Markets in Crypto Assets (MiCA) comes into force, trading platforms will be required to issue white papers for issuerless tokens.
The classification chart is simple, although not conclusive. An asset embodied in instruments that represents rights equivalent to a share of profits or losses or a payment is a security if it is transferable and an investment instrument if it is non-transferable. If the asset represents the right to provide a service or product, it is an investment instrument if it has investment characteristics, depending on the analysis of each case.
The FSMA also warned that regardless of an asset’s classification, it will also be subject to other laws, such as the rules governing virtual asset service providers. Comments on the communication and the graph are welcome until July 31.
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