Belgian Financial Regulator Claims Bitcoin and Ether Aren’t Securities
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Belgian financial regulator has clarified its stance on cryptocurrencies, explaining that digital assets not specifically built by companies can’t be classified as securities.
Computer-Made Coins Not Under Securities Laws
Earlier this week, Belgium’s Financial Services and Markets Authority (FSMA) shared a report confirming its stance that digital assets are not securities.
According to the agency, the update to the report, originally open for comment in July, was prompted by increased demand for clarification on how its existing financial laws affect crypto. It explained that under its “stepwise plan,” a cryptocurrency would be considered security only if an individual or an entity issued it.
However, if the digital asset doesn’t have an issuer and was instead built as a result of computer code, such as Bitcoin or Ether, then securities laws wouldn’t cover its operations.
Nevertheless, the agency also pointed out that digital assets would still have to abide by some financial regulations, especially if companies adopt them as a medium of exchange. The companies adopting them would also need to abide by appropriate financial laws, which will govern their use of these assets in their entirety.
It also explained that these laws would form its guiding principles on cryptocurrencies until the European Parliament’s Markets in Crypto Assets Regulation (MiCA) is adopted, a process that is expected to happen by the start of 2024.
Belgium has made gradual progress in establishing clear regulations for the digital asset sector. This is also primarily due to the increasing adoption of the asset from regulators in the country. Christophe De Beukelaer, a Belgian Parliament member, became the first European lawmaker to convert his salary to Bitcoin earlier this year. And since he did, he has continued to trumpet the need for clearer regulations for the digital asset sector in the country.
The SEC’s Stubborn Stance
It is also interesting to note how the country’s crypto regulation approach directly contrasts with that of the American authorities. The Securities and Exchange Commission (SEC) has continued to press its claim that most cryptocurrencies are securities, with the agency taking every approach possible to bring the industry under its jurisdiction.
While SEC Chairman Gary Gensler had initially been skeptical about classifying Bitcoin and Ether as securities, he appears to have changed his tune on the latter following its blockchain’s Merge earlier this year.
A few days after the milestone event, Gensler spoke to reporters after a meeting with the Senate Banking Committee, explaining that digital assets and intermediaries that allow their customers to stake crypto might be classified as securities under the SEC’s Howey test.
As Gensler explained, staging is an activity in which investors put down units of their digital assets in anticipation of profits, even though these profits usually come from the efforts of others.
Thus, by allowing holders to stake coins, these intermediaries essentially facilitate an investment activity, which looks incredibly similar to lending. Based on these classifications, all proof-of-stake (PoS) coins may be, in fact, securities.
The SEC has also been amidst a two-year legal battle with Ripple Labs, the developers of the XRP cryptocurrency. In December 2020, the securities regulator sued the crypto developer, claiming that XRP should be considered a security and that Ripple Labs engaged in an illegal offering for XRP’s initial coin offering (ICO) in 2013.
While both parties have continued to make arguments about their case, the SEC remains adamant that XRP should be brought under its jurisdiction, as well as most other coins in the market.