Belgium Declares that Bitcoin and Ethereum Are Not Securities

Belgium’s Financial Services and Markets Authority has declared that crypto assets without issuers, like Bitcoin (BTC) and Ethereum (ETH), are not securities.

In a press release on November 24, the financial regulator stated that it is unconcerned with the technology and whether or not an asset relies on a blockchain, would not affect how it is classified.

Belgium’s Key Classification Factor

If a transferable asset has an issuer, the regulator claims that the issuer will be a key factor. If not, the Prospectus Regulation, Prospectus Law, and MiFID conduct requirements will not be applicable because it is not eligible to be referred to as a security or investment instrument.

However, other regulations may apply to these assets if they have a payment or exchange function.

The rules against money laundering and other local regulations apply to crypto assets as well, even if they are not securities. Retail customers cannot be given access to financial instruments based on cryptocurrencies in Belgium.

The Belgian government stated that, under the Prospectus Regulation, assets that issuers have incorporated into instruments may be treated as securities. These items can be categorized as securities or investment instruments in the regulator’s opinion, if they are transferable, represent a right to a portion of the gain or loss, or even give a right to vote.

What Assets Qualify As Securities?

The financial watchdog stated that under the Prospectus Law, assets with investment objectives would also be categorized as investment instruments. Investing objectives are described below:

• The instruments can be transferred to parties besides the issuer.
• The issuer issues a limited number of instruments.
• The issuer intends to trade them on the market and anticipates making money.
• The monies raised are utilized for the issuer’s general financing; the service or product has not yet been launched.
• The instruments are used to pay staff.
• The issuer arranges a number of rounds of sales at various prices.

The regulator said this intervention was necessary as it has received many inquiries about what constitutes a security in terms of a crypto asset.

While this is happening in Belgium, many crypto-related issues are still looming in the US. Regulators in the US have filed multiple lawsuits against cryptocurrency companies due to the lack of definite regulatory certainty. A two-year legal dispute between the U.S. SEC and Ripple over the sales of its XRP currencies is presently in progress.

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