Cryptocurrencies without an issuer such as bitcoin (BTC) and ether (ETH) are not securities, Belgium’s Financial Services and Markets Authority said Thursday.
The regulator said it was getting an increasing number of questions about the regulatory treatment of crypto and hoped to address the most frequently occurring gray areas, including when digital assets can be classified as securities.
In jurisdictions such as the U.S., squabbles over when crypto is a security have led to court proceedings, with the Securities and Exchange Commission saying Ripple Labs should have registered its cryptocurrency XRP.
The Belgian rule “is neutral as regards technology,” FSMA added, suggesting that classification as a financial instrument or security shouldn’t depend on whether an asset uses a blockchain or something more traditional.
The rules, which largely mirror those set out in a July consultation, say that transferable instruments with an issuer are likely to constitute a security. That means they must produce an honest prospectus of information for potential investors, and must apply an EU law known as MiFID, which requires financiers to be clear and to avoid conflicts of interest. But cryptocurrencies like bitcoin don't count as they don't have an issuer.
Even if those rules don’t apply, there are still existing requirements on crypto companies to apply anti-money laundering procedures, the guidance said. A new EU law known as the Markets in Crypto Assets regulation (MiCA) is also due to take effect in the coming years – and will require new crypto offerings to produce a white paper, comparable to a stock prospectus.
Belgian rules passed in 2014 make it unlawful for professionals to distribute financial products based on crypto to retail clients.