The Belgian regulator says that BTC and other cryptocurrencies are not financial assets

Last week, the Belgian Financial Services and Markets Authority (FSMA) ruled in touch On the nature of cryptocurrencies, noting that Bitcoin (BTC), Ethereum (ETH) and other decentralized cryptocurrencies are not classified as financial assets.

The FSMA is responsible for ensuring the honest and fair treatment of financial consumers in Belgium and aims for the fair and orderly functioning as well as the transparency of that country’s financial markets, ensuring that listed companies provide correct and complete information, among other regulatory functions.

The Belgian regulator was one of the last in the world to establish itself with regard to cryptocurrency. According to the FSMA, those assets that are not issued by the issuer are not considered securities, but their issuance is decentralized, according to Contact Which was set up in july this year and Draw accompanying explanation.

If there is no issuer, as in cases where the instruments are generated by computer code and not in implementation of an agreement between the issuer and the investor (for example, bitcoin or ether), then, in principle, the prospectus regulation, the prospectus code, and the code of conduct MiFID does not apply“.

The FSMA explained that through this communication, it has provided explanations for the most common cases in which crypto assets may fall within the scope of the Prospectus Rules and/or the MiFID Rules of Business Conduct.

Essentially, MiFID complies with the Markets in Financial Instruments Directive, which is the European directive that regulates the provision of investment services that directly affects the way credit institutions or investment firms inform, advise or sell financial products to their clients. customers or potential customers, which has been in effect since 2007.

It is certain that the issuance of most of the crypto activities available in the market is not centralized, rather it is carried out in a decentralized manner, which makes it impossible to comply with this requirement required by European law and therefore the FSMA concluded that crypto activities should not be considered as financial assets.

On the other hand, the FSMA emphasized that while cryptocurrencies are not classified as securities by that body, they can still be subject to other regulations if a company or person uses cryptocurrency as a means of exchanging value for certain cryptocurrency-related services.

However, if the instruments have a payment or exchange function, other regulations may apply to the instruments or to persons providing certain services related to these instruments.states the statement.

Despite the fact that the FSMA statement is a response to hundreds of questions that the regulator has received from users, suppliers and organizations based in Belgium, it does not have any legal character in itself.

This statement stated that the plan “Step by StepThe Belgian FSMA is technology-neutral, therefore qualification as a value, financial or investment instrument does not depend on the technology used, whether it is on the blockchain or not.

The FSMA has also stated that it will update the plan as necessary, and thus, this opinion of the Belgian regulator should be considered, as a current illustration of the legal vacuum that exists in most countries, although the same contradicts other opinions of financial regulators. Although it may change later.

It should be noted that the regulatory framework for crypto assets in Europe is the Markets in Crypto Assets Act or ‘Markets in Crypto Assets’, known as MiCA, which will come into force at the beginning of 2024.

MiCA, promoted in the European Parliament, was originally proposed, on 24 September 2020, as part of a package European Commission Digital Financefor which agreement was reached on MiCA, digital operational flexibility and a proposal on decentralized registry technology.

The European MiCA regulation sets clear rules for all cryptocurrency service providers, but also for users of these crypto assets in Europe and all EU member states.

As an important goal of MiCA, it seeks to control the issuance of cryptocurrencies and tokens according to an institutional model of regulation, which sets new requirements that extend even to stablecoins, operating within the Eurozone.

However, the Belgian regulator’s response may serve as a basis for other regulators in Europe and the rest of the world, at a time when cryptocurrencies are regulated by various regulations.

However, the FSMA’s announcement contradicts the view taken specifically by the US Securities and Exchange Commission (SEC), which is highly respected around the world.

According to the SEC, Bitcoin can still be considered a commodity while ETH is now valued by US regulatory authorities, after changing its consensus mechanism to proof of stake (PoS). “Proof of participationand the creation of storage ponds.

Finally, the FSMA clarified that it maintains a neutral position regarding cryptocurrency technology, indicating that it is not important whether the underlying technology of cryptocurrency works through a blockchain or through other traditional electronic means.

Judicial alert Investing in crypto assets is unregulated, may not be suitable for retail investors and the entire amount invested may be lost.

 

 

 

 

 

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