Crypto assets that are limited in number or marketable in the hope of profit may be considered investment instruments that must publish a prospectus for possible investors, according to a consultation published Wednesday by the Belgian financial regulator.
While the European Union finalizes its groundbreaking Markets in Crypto Assets Regulation (MiCA), issuers must first determine whether cryptocurrencies are covered by existing securities regulations, according to Belgium’s Financial Services and Markets Authority (FSMA).
“While awaiting a harmonized European approach, the FSMA wishes to provide clarity about when crypto-assets may be considered to be securities, investment instruments or financial instruments and may therefore fall within the scope of the prospectus legislation and/or the MiFID conduct of business rules,” said the regulator.
MiCA will require cryptocurrency issuers to publish a White Paper with investor information. According to the paper, until that takes effect, which is due in 2024, authorities will apply a set of illustrative features to determine if a cryptoasset falls under the existing prospectus law that applies to stocks and bonds.
The EU’s Markets in Financial Instruments Directive (MiFID) compels financiers to be upfront and honest with potential investors, and to avoid conflicts of interest. The statement stated that assets such as bitcoin (BTC) and ether (ETH) will not be subject to prospectus or MiFID laws since they have no issuer and are instead produced by computer code.