Cryptocurrency Legislation in Belgium Prior to 2024

As we look back at the period leading up to 2024, Belgium’s approach to cryptocurrency legislation reflects a cautious yet gradually evolving regulatory environment. The country’s legislative measures predominantly focused on integrating cryptocurrencies within existing financial and anti-money laundering frameworks.

Introduction of Cryptocurrency Registration Requirements

A significant development occurred on January 27, 2022, when the Belgian Parliament passed a draft law amending the Belgian anti-money laundering legislation. This amendment required cryptocurrency providers to register in Belgium under the supervision of the Belgian Financial Services and Markets Authority (FSMA). This legislation, which came into effect shortly after its publication in the Belgian Official Gazette, imposed strict restrictions on non-EEA entities, barring them from offering services related to virtual currency exchange and crypto wallets on Belgian territory unless they established a branch or other permanent establishment in Belgium​

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​Scope and Limitations of the Legislation

The law’s reach had its limitations. Well-known electronic cryptocurrency exchanges like Coinbase, Kraken, and Binance did not fall within its scope as long as they did not establish a physical presence in Belgium. This aspect of the legislation led to concerns regarding the clarity and effectiveness of the law in regulating the broader cryptocurrency market in Belgium​

​Registration Process and Compliance Requirements

For registration with the FSMA, providers were required to meet specific criteria. The management of these providers needed to demonstrate their suitability for their role, and any person with a significant stake in the provider had to be deemed appropriate for sound and prudent management. The exact rules for registration, including the necessary documentation, were to be detailed in a Royal Decree​

​Penalties for Non-Compliance

The law stipulated severe penalties for non-compliance, including prison sentences and fines for those providing cryptocurrency services without registration or after renouncing or losing such registration​

​Advertising Regulations

In addition to registration requirements, Belgium introduced new laws concerning cryptocurrency advertising. These laws, which came into effect on May 17, required all crypto ads to be accurate and to warn investors of the inherent risks. Any mass-media campaign promoting digital currencies had to be submitted to the FSMA 10 days in advance for review. This move was part of a broader European trend to impose restrictions on crypto advertising​

​Integration with the EU’s Fifth Money Laundering Directive

Belgium transposed the EU’s Fifth Money Laundering Directive (5MLD) into national law, extending the anti-money laundering regime to providers offering exchange services between virtual and fiat currencies and custodian wallet providers. Virtual asset service providers in Belgium were thus subject to registration and supervision by the FSMA. However, there were no specific financial services regulations regarding virtual assets, with such assets potentially characterized as financial instruments under broader financial regulations​

​Regulation of Cryptocurrency Activities

Specific activities like exchange services and custody were regulated under Belgian law. However, activities like borrowing/lending and yield/staking were not directly regulated unless they fell under other consumer credit regulations. This delineation indicated a selective approach to cryptocurrency regulation, focusing primarily on areas with significant money laundering and terrorism financing risks​

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Conclusion

In summary, prior to 2024, Belgium’s legislative landscape for cryptocurrencies was characterized by an emerging regulatory framework focused on anti-money laundering compliance, operational establishment requirements, and advertising regulations. This approach underlined Belgium’s cautious yet progressive attitude towards integrating cryptocurrencies into its financial legal system.