Belgium’s financial regulator has confirmed its position that bitcoin (BTC), Ether (ETH) and other cryptocurrencies that are issued solely through computer code do not constitute securities..
The explanation came from the Belgian Financial Services and Markets Authority (FSMA) in a report on November 22.the draft of which was opened for comments in July 2022.
The clarification comes after an increase in demands for answers on how current financial laws and regulations in Belgium apply to digital assets.according to the FSMA.
Although not legally binding under Belgian or European Union law, The FSMA stated that under its “gradual plan”, cryptocurrencies would be classified as a security if issued by a person or entity.”:
“If there is no issuer, as in cases where the instruments are created by computer code and this is not done in execution of an agreement between the issuer and the investor (for example, bitcoin or Ether), then, in principle, the Prospectus Regulation, the Prospectus 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:
“However, if the instruments have a payment or exchange function, other regulations may apply to the instruments or to persons who provide certain services related to those instruments.”
FSMA also noted that its phased plan is technology neutral.suggesting that it is irrelevant whether digital assets exist and are made available on a blockchain or through other traditional means.
FSMA first produced the report in July 2022 as a means of addressing frequently asked questions from Belgium-based digital asset issuers, offerors and service providers..
The FSMA stated that the phased plan would serve as guidance until the European Parliament’s Regulation on Crypto Asset Markets (MiCA) is adopted.which is expected to enter into force in early 2024.
Belgium’s clear guidelines contrast with the “regulation by execution” approach adopted by the US Securities and Exchange Commission (SEC)which is currently fighting for control of digital asset regulation with the United States Commodity Futures Trading Commission (CFTC).
While, SEC Chairman Gary Gensler has long considered BTC to constitute a commodity; recently argued that post-merger ETH and other staked coins can constitute security under the Howey test.
Belgium has not been a big adopter of digital assets to date; a recent study by blockchain data platform Chainalysis ranks Belgium at 94th in its Global Cryptocurrency Adoption Index.
Residents of the European country have access to 10 cryptocurrency exchangesaccording to data from cryptocurrency data source Bitrawr.
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