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Bitcoin and Ethereum are not securities


  • Belgium’s FSMA clarifies that BTC and ETH are not securities as they do not have issuers.
  • According to the FSMA, cryptocurrencies that have issuers are obligated to adhere to securities regulations.

The Financial Services and Markets Authority (FSMA), Belgium’s financial regulatory authority, has clarified its stance on cryptocurrencies that it considers to be securities and those it does not.

In the communication the FSMA published in response to multiple requests for guidance from market participants, the watchdog stated that cryptocurrencies that do not have an issuer, such as Bitcoin (BTC) and Ethereum (ETH), are not securities.

Cryptocurrencies that are not securities do not fall under Belgium’s Prospectus Regulation, Prospectus Regulation, and the Markets in Financial Instruments Directive (MiFID) European directive that Belgium also operates under.

“If there is no issuer, as in cases where instruments are created by a computer code and this is not done in execution of an agreement between issuer and investor (for example, Bitcoin or Ether), then in principle the Prospectus Regulation, the Prospectus Law and the MiFID rules of conduct do not apply,” the FSMA said.

Cryptocurrencies that have an issuer are viewed in one of two scenarios. In the first scenario, they are considered to be an ‘instrument’ that represents a right to a share in the profit or losses of a project and potentially a voting right. In this scenario, they are obligated to publish an information note under the Prospectus Regulation and Law and also stick to the MiFID rules of conduct.

The second class of cryptocurrencies that are considered securities are those that represent a right to delivery of a service or product from the issuer. The Prospectus Regulation and Law as well as MiFID rules apply to them, the statement noted.

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The statement added that other regulations may apply to all cryptocurrencies that have a payment or exchange function. Virtual Asset Service Provider VASP) laws that came into force in May 2022 also apply to all crypto firms, the FSMA pointed out.

Global regulatory clarity expected to boost BTC price

The move by Belgium’s financial regulator has been long desired by crypto market participants who have been calling on regulators to provide clarity and legal recognition for digital assets to drive adoption.

Regulators globally, including the European Union (EU), have been racing to provide this much-demanded clarity. With more regulatory clarity and adoption, the price of Bitcoin and other cryptocurrencies is expected to rise in value.

At present, BTC is changing hands at around $16,200, down 1.8% in the last 24 hours. The current price is an about 65% drop in value in the year-to-date time frame. Analysts are however hopeful that the price of the benchmark crypto will surge to new highs with more adoption.

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