Belgian regulator reviews crypto asset classifications while awaiting harmonization


The Financial Services and Markets Authority (FSMA), the Belgian regulator, is seeking comments on its communication on the classification of crypto assets as securities, investment instruments or financial instruments. Aimed at issuers, offerors and service providers, the agency’s communication will serve as guidance to the existing order until European regulatory harmonization is achieved. 

The communication is meant to address frequently asked questions and is not exhaustive. It is accompanied by a stepwise chart to help its readers determine the classification of an asset.

Crypto assets that are incorporated into an instrument, as is generally the case for assets that are exchangeable or fungible, may be classified as securities under the European Union (EU) Prospectus Regulation or as investment instruments under the EU Prospectus Law. In those cases, MiFID (Markets in Financial Instruments Directive) rules of conduct apply.

If an asset has no issuer, as in the case of Bitcoin (BTC) or Ether (ETH), where the instruments are created by a computer code that does not give rise to a legal relationship, then in principle the Prospectus Regulation, Prospectus Law and MiFID rules do not apply. When the European Union Regulation on Markets in Crypto Assets (MiCA) takes effect, trading platforms will be required to issue white papers for issuer-less tokens.

Related: Belgian financial regulator FSMA to regulate crypto exchange services

The classification chart is straightforward, if not conclusive. An asset incorporated into instruments that represents the rights equivalent of a share in profits or losses or a payment is a security if it is transferable and an investment instrument if nontransferable. If the asset represents the right to delivery of a service or product, it is an investment instrument if it has investment characteristics, according to case-by-case analysis.

FSMA also warned that, regardless of the classification of an asset, it will be subject to additional laws as well, such as rules governing virtual asset service providers. Comments on the communication and chart are welcome through July 31.

Products You May Like

Articles You May Like

How to create and launch a cryptocurrency token with TokenMint?
Crypto firms failed to deliver ‘promised benefits’ from lawmaker-backed incentives, says nonprofit
Robinhood’s Crypto Unit Fined $30 Million By New York Financial Regulator
Vitalik: Centralized USDC could decide the future of contentious ETH hard forks
Polkadot ‘cup and handle’ setup sees DOT price 50% higher by September

Leave a Reply

Your email address will not be published.