The Belgian regulator is arguing against ETH, BTC and other currencies as securities

FSMA, the Belgian financial regulator Submitted Arguments for why it believes Ethereum (ETH), Bitcoin (BTC) and other decentralized crypto assets are not securities.

The FSMA’s main argument is called the phased plan, which is outlined in a document released on November 22. It is primarily based on the idea that crypto assets that are generated by computer code, such as ETH or BTC, do not constitute securities.

“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 document read.

However, the FSMA has made it clear that such assets can be subject to other types of regulations. This is provided that they feature payment or exchange functions.

“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,” it said.

Under the FSMA’s tiered scheme, crypto assets issued by an individual or entity and incorporated into “instruments” are likely to be classified as securities.

“If the assets are incorporated into an instrument, then it is possible to distinguish between a situation in which an instrument represents a right in respect of an issuer and/or another person (such as a guarantor) and a situation where this is not the case”, FSMA said.

The FSMA also said that the qualification of an object as a financial, financial, or investment instrument is “not dependent on the technology used.”

The FSMA’s tiered plan will provide guidance to the European Parliament’s Markets in Crypto Asset Regulation (MiCA) until its adoption. MiCA is still in the works and is expected to be ratified at the beginning of 2023. This means that the regulations will come into force in 2024.

The FSMA’s arguments about ETH and BTC not being securities contradict what the SEC chairman believes. While Gary Gensler believes that BTC is a commodity, he has said many times that ETH is a security. This is especially since it has implemented a Proof of Stake consensus mechanism.

This is in contrast to the views of US CFTC Chairman Rustin Behnam. He has repeatedly said that both ETH and BTC are commodities from his point of view.

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