Gary Gensler, the chairman of the U.S. Securities Exchange Commission, disagrees with Belgium's position on the requirements that must be completed for a cryptocurrency asset to be considered a security.
Why is this so?
According to Belgium's financial regulatory authorities, Bitcoin (BTC), Ether (ETH), and other cryptocurrencies only issued by computer code do not count as securities.
The justification was provided in a report (1) published on November 22 by Belgium's Financial Services and Markets Authority (FSMA), a draft of which was made available for comment in July 2022. The clarification follows a rise in inquiries regarding how Belgium's current financial laws and regulations apply to digital assets, according to the FSMA.
The FSMA declared that under its "stepwise strategy," cryptocurrencies would be classified as security if issued by an individual or company, even though this was not legally binding under Belgian or EU law. The Belgian regulatory agency (2) emphasized that even while cryptocurrencies are not considered securities, they may be governed by other laws if used as a means of exchange by a business.
What's considered a security, then?
Gary Gensler, the head of the Securities and Exchange Commission, has always seen bitcoin as a commodity. Still, he recently suggested that post-Merge ETH and other staked currencies qualify as securities under the Howey test. According to a new survey by blockchain analytics platform Chainalysis (3), Belgium ranks 94th in the world regarding the adoption of cryptocurrencies. Belgium hasn't been a big user of digital assets up to this point. According to information from the cryptocurrency data site Bitrawr (4), residents of the European nation have access to 10 cryptocurrency exchanges.
The FSMA also said that its step-by-step approach is technology-neutral, implying that it makes no difference whether digital assets exist and are enabled on a blockchain or through other conventional methods. The FSMA initially developed the paper in July 2022 to respond to commonly asked issues from issuers, offerers, and service providers of digital assets with a basis in Belgium.
The Markets in Crypto Assets Regulation (MiCA) of the European Parliament is anticipated to be enacted and go into effect at the beginning of 2024. Still, FSMA noted that the stepwise plan will act as a guide until then. Belgium's specific regulations contrast with the "regulation by enforcement" strategy used by the U.S. Securities Exchange Commission (SEC), which is presently competing with the U.S. Commodity Futures Trading Commission for regulatory authority over digital assets (CFTC).