Belgian authorities stated that assets with issuers embedded in instruments could be classified as securities under the Prospectus Regulation.
The financial regulator stated in a press release on November 24 that it is unconcerned with the technology and that its asset classification would not be determined by whether or not it relies on a blockchain.
The regulator is concerned with whether the transferable asset has an issuer. If it does not, it is not a security or investment instrument, and the Prospectus Regulation, Prospectus Law, and MiFID rules of conduct will not apply.
“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).”
However, if these assets have a payment or exchange function, they may be subject to additional regulations.
Furthermore, crypto assets that are not considered securities are subject to anti-money laundering laws as well as other local laws. The distribution of crypto-based financial instruments to retail customers in Belgium is prohibited.
Securities are assets with issuers and investment objectives
The Belgian authorities stated that assets incorporated into instruments by issuers could be declared securities under the Prospectus Regulation.
According to the regulator, these instruments can be classified as securities or investment instruments if they are transferable, represent a right to share in profit or loss, or even grant a voting right.
Under the Prospectus Law, assets with investment objectives would also be classified as investment instruments, according to the financial watchdog. The following are the investment goals:
- The instruments can be transferred to individuals other than the issuer.
- The issuer only creates a small number of instruments.
- The issuer intends to trade them on the market and anticipates a profit.
- The funds raised are used for the issuer’s general financing, and the service or project has yet to be developed.
- The instruments are used to pay employees.
- The issuer holds several rounds of sales at various prices.
The regulator stated that this intervention was necessary due to several inquiries about what qualifies a crypto asset as a security.
To read our blog on “How Bitcoin differs from conventional money,” click here