FSMA claims that for cryptocurrencies to be securities, they have to be issued by individuals or entities.
Financial Services and Markets Authority (FSMA), the financial regulatory agency in Belgium ensuring honest and equitable treatment of financial consumers, claims that cryptocurrencies, such as Bitcoin (BTC) or Ethereum (ETH), issued using computer code are not securities.
According to the report shared by FSMA on November 22nd, the need to clarify the matter came from an increased number of questions regarding how Belgium’s financial laws and regulations apply to cryptocurrencies.
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It is worth noting that in the United States, the lack of clarifications from the Securities and Exchange Commission led to court proceedings when the SEC sued Ripple Labs for selling its native token, XRP, as securities without authorization.
In the report, FSMA highlighted that based on its “stepwise plan,” cryptocurrencies would be considered securities only when they are issued by an entity or individual.
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.
However, FSMA emphasized that although cryptocurrencies are not considered securities, they can still be regulated if a company uses them as a medium of exchange.
Nevertheless, if the instruments have a payment or exchange function, other regulations may apply to the instruments or the persons who provide certain services relating to those instruments.
The report’s draft was first issued in July 2022, aiming to provide clarity for Belgium-based crypto service providers.
At the end of its report, FSMA stated that its "stepwise plan" is likely to function until the European Parliament launches its Markets in Crypto Assets Regulation (MiCA).
