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

The FSMA notes in the communication that market players are mainly in search of clarity about when crypto-assets may be classified as a security within the meaning of the EU Prospectus Regulation or as an investment instrument within the meaning of the Belgian Prospectus Law (supplementing the EU Prospectus Regulation). Depending on an asset’s classification, other legislation may also apply, such as the MiFID rules, virtual asset service providers regulations or other pieces of legislation.

Stepwise plan

The FSMA has developed a stepwise plan (accessible here). In its plan, the FSMA focuses on the main questions and the situations which it has encountered most frequently to date. It does not, however, address all potential classifications. The plan is neutral as regards technology as the FSMA is of the opinion that the characterisation as security, financial instrument or investment instrument does not depend on the technology that is being used.

Possible legal characterisation of crypto-assets

If there is an issuer of crypto-assets incorporated into instruments, the following characterisations are possible:

• Characterisation of crypto-assets as securities: if crypto-assets are transferable instruments and represent a right to share in the profits or losses of a project and potentially a voting right, or a right to payment of a sum of money or an equivalent, these crypto-assets are, as a rule, considered to qualify as securities within the meaning of the EU Prospectus Regulation.
• Characterisation of crypto-assets as financial instruments: if crypto-assets are transferable instruments and represent a right to share in the profits or losses of a project and potentially a voting right, or a right to payment of a sum of money or an equivalent, these crypto-assets also qualify as financial instruments, so that MiFID rules of conduct would apply.
• Characterisation of crypto-assets as investment instruments: if crypto-assets are non-transferable instruments and represent a right to share in the profits or losses of a project and potentially a voting right, or a right to payment of a sum of money or an equivalent, these crypto-assets are classified in principle as investment instruments under the Belgian Prospectus Law. In addition, if the crypto-assets represent a right to the delivery of a service or a product by the issuer and have an investment objective, the instruments are classified, as a rule, as investment instruments within the meaning of the Belgian Prospectus Law.

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