Bitcoin (BTC), Ethereum (ETH) Are Not Securities: Declares Belgium’s FSMA

Key Insights

• Belgium’s new guideline says digital assets run by codes are not classified as securities.
• Crypto assets such as BTC and ETH will not be considered securities 
• The FSMA guideline contains a stepwise plan that contradicts the SEC’s stance. 

Belgium, alongside other countries, is rolling out several regulatory frameworks for the crypto industry. This month, we have seen several agencies and industry players addressing the hitherto ambiguous regulations of digital assets. 

While Belgium is regarded as a crypto-friendly country, the new regulation seems to have generated mixed reactions in the industry.

 Decentralized Coins Are Not Securities

Recently, Belgium’s Financial Services and Markets Authority (FSMA) released a report. The report highlights the conditions that crypto assets must meet to classify them as a security. Similarly, the report explains cryptocurrencies issued solely by computer codes— they do not constitute securities, and Belgium will not treat them as one.

The country’s Financial Services and Markets Authority (FSMA) said the clarification became necessary due to increased demand from industry players. Industry players in the country sought clarification on how Belgium’s existing financial laws and regulations apply to digital assets. 

Similarly, the FSMA revealed that under its “stepwise plan,” only cryptocurrencies issued by an individual or entity will be classified as a security. However, the classification is not legally binding under Belgium or European Union law. 

Furthermore, the Belgian regulatory authority added that digital assets not categorized as securities may still be subject to other regulations. That is, if such a digital asset has a payment or exchange function, it may be subject to other regulations— or the person providing certain services relating to the instrument may be subject to regulations. 

FSMA Guideline Contradicts SEC’s Stance

This FSMA report was first drafted in July 2022. It was compiled in response to frequently asked questions by digital assets enthusiasts and service providers.

Since the release of the report and the inclusion of the Stepwise plan that clarifies what assets will be considered securities —, several industry players have reacted. 

Many industry players opined that the Belgium FSMA guidelines contrast the US SEC stance of “regulation by enforcement. ” You would recall that the SEC and CFTC are contesting to control digital assets in the US. This Belgian stance, however, adds to the woes of the SEC. 

Furthermore, the FMSA said the Stepwise plan would be the guideline for the crypto industry until the EU parliament adopts the MiCA legislation.

There are expectations that the Crypto Assets regulation will take effect by 2024.