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Belgium is waiting for harmonization while reviewing crypto

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The Belgian regulators, the Financial Services and Markets Authority, is collecting feedback on its message about the categorization of cryptocurrencies as financial instruments, investment instruments, and securities.  The institution’s letter, aimed at makers, offerors, and network operators, will act as advice to the present regulation pending European regulatory uniformity being reached.

The letter is intended to answer common questions, although it is not complete. It is supplemented with a step-by-step chart to assist readers in determining the asset categorization.

Crypto resources that are integrated into an entity, as is often the situation with interchangeable or replaceable assets, may be categorized as securities according to the European Union (EU) Prospectus Regulation or as investment instruments according to the EU Prospectus Law. MiFID (Markets in Financial Instruments Directive) norms of conduct exist in certain instances.

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Suppose an item seems to have no issuer, such as Bitcoin (BTC) or Ether (ETH), in which the securities are formed by computer software that does not constitute a legal connection. In that case, the MiFID, Prospectus Law, and Prospectus Regulation requirements do not exist in theory. Major exchanges will be forced to submit white papers for tokens that don’t have an issuer once the European Union Regulation on Markets in Crypto Assets (MiCA) goes into effect.

Is this classification necessary?

The categorization chart is simple, if not definitive. If it is movable, an asset integrated into tools that reflects the rights counterpart of a stake in financial results or payment is security; if it is not tradable, it is an investment instrument. If the assets offer the right to obtain a product or a service, it is an investment instrument if it exhibits investment tendencies in a specific instance

FSMA further noted that, independently of an asset’s categorization, it would be subject to similar legislation, such as those controlling virtual currency network operators. Until July 31, feedback on the communication and chart are appreciated.

This is a significant departure from the FSMA’s previous ruling. Belgium’s financial regulatory authorities stated that cryptocurrency exchanges and custodial wallet services available in the market must register within a short period of time in order to be regulated.

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