Regulators globally are attempting to give certain digital assets precise definitions and so far, very little has been done in that regard.
The top two ranking cryptocurrencies Bitcoin (BTC), Ethereum (ETH), and some other decentralized digital coins have been categorized as non-securities. Most of these other decentralized coins are those which are issued solely by computer codes and do not have other issuers.
Specifically, regulators from the Belgian Financial Services and Markets Authority (FSMA) confirmed that they have been receiving questions about the regulation of digital assets.
The watchdog, therefore, attempted to proffer explanation and clarity on what qualifies a crypto asset as securities. However, its explanation seems to be in contrast with the opinion of the United States Securities and Exchange Commission (SEC).
“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 regulators outlined.
Belgian Regulators Provide Guideline For Crypto Asset
There is a disclaimer that this definition is not legally binding under Belgium or European Union law, but is only part of the ‘stepwise plan’ of the regulators.
This Belgian stepwise plan is not influenced by the particular technology that is utilized by the virtual asset, that is, it is technologically neutral. Therefore, it is not relevant whether the crypto asset is powered by a blockchain or any other or any other traditional route.
Furthermore, FSMA says that if such cryptocurrency which does not qualify as securities is used as a medium of exchange, it may be subjected to some other form of regulations.
“Nevertheless, if the instruments have a payment or exchange function, other regulations may apply to the instruments or the persons who provide certain services relating to those instruments.”
Until the final launch of the European Union Markets in Crypto Assets Regulation (MiCA) which has received Parliament approval, this stepwise plan will be used as a guideline. Ripple Labs is still facing a lawsuit against the SEC for offering XRP which the regulator claims are unregulated securities.