Belgium says Bitcoin, Ethereum are not securities

Belgian Financial Services and Markets Authority Declared Issuerless crypto assets like Bitcoin (BTC) and Ethereum (ETH) are not securities.

In a November 24 press statement, the financial regulator said it was not involved with the technology and that the classification of an asset would not be determined by whether it relies on blockchain.

According to the regulator, the focus is on whether the transferable asset has an issuer. Otherwise, it does not qualify as a security or investment product and the Prospectus Rules, Prospectus Law and MiFID’s Rules of Conduct do not apply.

When there is no issuer, such as when the product is created by computer code and not in the execution of a contract between the issuer and the investor (e.g. Bitcoin or Ether).

However, if these assets have payment or exchange functionality, other regulations may apply.

In addition, crypto assets that are not considered securities are subject to anti-money laundering laws and other local laws. Distribution of crypto-based financial products to Belgian retail customers is prohibited.

Assets with an issuer, investment objectives labeled as securities

Belgian authorities said asset issuers embedded in deeds could be declared as securities under prospectus regulations.

According to regulators, if these instruments are transferable, represent the right to share profits or losses, or confer voting rights, they can be classified as securities or investment instruments.

The financial watchdog added that assets intended for investment are also classified as investment products under the prospectus law. Investment objectives are defined as:

• A certificate may be transferred to a person other than the issuer.
• Issuers issue a limited number of products.
• The issuer plans to trade them on the market and hopes to make a profit.
• The collected funds will be used for general funding of the issuer and services.
  The project is not yet developed.
• Instruments are used to pay staff.
• The issuer makes several sales at various prices.

The regulator said the intervention was necessary after several questions about what counts crypto assets as securities.

In the United States, the lack of clear regulatory clarity has led to several regulatory lawsuits against cryptocurrency companies. The US SEC is currently embroiled in a two-year legal battle with Ripple over the sale of its XRP token.