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Bitcoin, Ethereum Not Securities: Clarifies Belgium’s FSMA

Belgium’s financial regulator does not consider crypto-assets such as Bitcoin (BTC) and Ethereum (ETH) to be securities.

The Financial Services and Markets Authority (FSMA) released a statement in which it said cryptocurrencies that are issued solely by computer code do not constitute securities. The regulator’s response comes after receiving an increasing number of questions about the application of financial rules on the asset class.

Win for BTC, ETH

With a prominent financial regulator attempting to address one of the grey major areas in the sector, FSMA’s latest clarification is viewed as a win for the community. The basis is a crypto-asset is not a security if there is no issuer.

“If there is no issuer, as in cases where instruments are created by a computer code and this is not done in execution of an agreement between issuer and 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 authority also stated that crypto-assets that classify as non-securities might be subject to other laws and regulations. But this is only applicable if they have a payment or exchange function, meaning if a firm uses the assets in question “as a medium of exchange.”

FSMA regards Belgium’s “step-wise” plan to be technology-agnostic and that the qualification as security, financial instrument, or investment instrument does not depend on the technology being used. The regulator also stated that it would update the plan as and when required.

According to the regulator, the step-wise plan would act as a guideline until the adoption of the European Parliament’s Markets in Crypto Assets Regulation (MiCA), which is slated for the beginning of 2024.

A Precedent for the US?

Belgium’s statement may set a precedent for regulatory framework across the world, which is in stark contrast to the views of US Securities Exchange Commission Chairman Gary Gensler, where Ripple Labs continues to battle the securities regulator over the status of XRP.

The agency had earlier claimed that 99% of cryptocurrency trading is most likely security trading and comes under their purview of regulations.

Additionally, Ethereum’s transition to proof-of-stake also placed the industry back in the crosshairs of the SEC after Gensler stated that PoS-based coins could be subject to securities laws.


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