Belgium says Bitcoin, Ethereum are not securities
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The Belgian Financial Services and Markets Authority announced that crypto-assets without issuers, such as Bitcoin (BTC) and Ethereum (ETH), are not securities.
The financial regulator said in a Nov. 24 press release that it is not a technology, and its asset classification is not determined by whether or not it depends on blockchain.
According to the regulator, it focuses on whether the transferable asset has an issuer. If this is not the case, it cannot be called a security or an investment instrument, and the Prospectus Regulation, the Prospectus Act and the MiFID procedural rules do not apply.
“If there is no issuer, such as in cases where the instruments are created by computer code, and this is not done in the execution of a contract between the issuer and the investor (for example, Bitcoin or Ether).”
However, other provisions may apply to these funds if they have a payment or exchange function.
Crypto assets, which are not considered securities, are also subject to anti-money laundering laws and other local laws. The distribution of crypto-based financial instruments to retail customers is prohibited in Belgium.
Assets of issuers, investment objectives designated as securities
Belgian authorities said that issuers that have included instruments can be declared securities under its prospectus regulation.
According to the regulatory authority, they can be classified as securities or investment instruments if these instruments are transferable, entitle to a share of profit or loss, or even give voting rights.
The Financial Supervisory Authority added that assets with investment objectives are also classified as investment vehicles according to its prospectus law. The investment objectives are defined below:
- The instruments are transferable to persons other than the issuer.
- The issuer issues a limited number of instruments.
- The issuer intends to trade in that market and expects to make a profit.
- The collected funds are used for the general financing of the issuer and the service or
the project has not yet been developed.
- The tools are used to hire personnel.
- The issuer organizes several rounds of sales at different prices.
The regulator said this intervention was necessary as it has received several questions about what qualifies a crypto-asset as a security.
In the United States, the lack of clear regulatory clarity has led to several lawsuits against crypto companies. The US SEC is currently embroiled in a two-year legal dispute with Ripple over the sale of its XRP tokens.