The Belgian Financial Services and Markets Authority clarifies the characterization of crypto-assets | JD Supra

Due to increased interest in crypto-assets in Belgium, the FSMA has been frequently involved in discussions on the legal and regulatory qualification of crypto-assets and crypto-asset-related services.

The FSMA notes in the Communication that market participants are primarily seeking clarification on when crypto-assets can be classified as a transferable security within the meaning of the EU Prospectus Regulation or as an investment instrument within the meaning of the Belgian Prospectus Law (supplementing the Prospectus Regulation of the EU). Depending on the classification of an asset, other legislation may also apply, such as MiFID rules, Virtual Asset Service Provider regulations or other pieces of legislation.

Step-by-step plan

The FSMA has drawn up a step-by-step plan (accessible here). In its plan, the FSMA focuses on the main issues and situations that it has encountered most frequently to date. However, it does not address all potential classifications. The plan is technologically neutral because the FSMA is of the opinion that the qualification of a transferable security, a financial instrument or an investment instrument does not depend on the technology used.

Possible legal characterization of crypto-assets

If there is an issuer of crypto-assets embedded in instruments, the following characterizations are possible:

• Characterization of crypto-assets in securities: if the crypto-assets are transferable instruments and represent a right to participate in the profits or losses of a project and possibly a right to vote, or a right to payment of a sum of money or equivalent, these crypto-assets assets are, as , considered as transferable securities within the meaning of the EU Prospectus Regulation.
• Characterization of crypto-assets as financial instruments: if the crypto-assets are transferable instruments and represent a right to participate in the profits or losses of a project and possibly a right to vote, or a right to payment of a sum of money or equivalent, these crypto-assets Assets also qualify as Financial Asset Instruments, so MiFID rules of conduct apply.
• Characterization of crypto-assets as investment instruments: if the crypto-assets are non-transferable instruments and represent a right to participate in the profits or losses of a project and possibly a right to vote, or a right to payment of a sum of money or equivalent, these crypto -assets are classified in principle as investment instruments within the meaning of the Belgian law on prospectuses. Furthermore, if the crypto-assets represent a right to delivery of a service or product by the issuer and have an investment objective, the instruments are classified, as a general rule, as investment instruments within the meaning of Belgian Prospectus law.

When the crypto-assets qualify as transferable securities, investment instruments and/or financial instruments, the FSMA notes that in addition to compliance with the applicable requirements of the EU Prospectus Regulation, the Belgian Prospectus Law and/or the MiFID rules, additional legislation may apply. , such as the rules governing market abuse or crowdfunding.