Belgium Cryptocurrency Laws

Belgium and Cryptocurrency

Belgium Cryptocurrency Laws

Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology

Cryptocurrencies remain unregulated in Belgium.  The National Bank of Belgium (Banque Nationale de Belgique, BNB) and the Financial Services and Markets Authority (Autorité des services et marchés financiers, FSMA) has warned that virtual currencies are not legal tender, and have warned against various risks posed by their use. [1] The Minister of Justice has announced plans to establish a legal framework for cryptocurrencies that would, among other things, verify the conversion and exchange rates of cryptocurrencies, similarly to what exists for traditional financial circuits.  The Minister has likewise indicated a desire to implement a mechanism for the courts to properly evaluate cryptocurrencies when they are seized as part of criminal investigations. 

Special Tax Inspectorate (STI)

For tax purposes, the Special Tax Inspectorate (STI) in Belgium generally treats income/gains resulting from the sale of cryptocurrency as “miscellaneous income” subject to tax.  

There are otherwise few pronouncements on the subject in Belgium.  Nonetheless, in 2020, the Financial Services and Markets Authority (FSMA) called for the regulation of digital currencies.  

Notably, the European Central Bank (ECB) defines virtual currency as “a digital representation of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money,” and provides that while virtual currency may serve as a substitute for currency, it is not legal tender. [2] The European Central Bank provides the following excerpted summary of what it terms “virtual currency schemes” (VCS): 

VCS present several drawbacks and disadvantages for users, i.e. lack of transparency, clarity, and continuity; high dependency on IT and on networks; anonymity of the actors involved; and high volatility. In addition, users face payment system-like risks owing to their direct participation in the VCS, as well as risks associated with certain intrinsic characteristics of VCS, i.e. the counterparty risk associated with the anonymity of the payee, the exchange rate risk associated with high volatility, and the risk of investment fraud associated, inter alia, with the lack of transparency. There are currently no safeguards to protect users against these risks.

Nevertheless, VCS presents some advantages as perceived by users. They could pose a challenge to retail payment instruments and innovative payment solutions as regards costs, global reach, the anonymity of the payer, and speed of settlement. A new or improved VCS, if it overcame the current barriers to widespread use, might be more successful than the existing ones, specifically for payments within “virtual communities”/closed-loop environments (e.g. internet platforms) and for cross-border payments.

A number of international authorities have developed an interest in VCS, including the Financial Action Task Force (FATF), given the potential risks for the integrity of the international financial system. Several central banks and financial and supervisory authorities around the world have warned users of the risks related to holding and transacting virtual currencies, provided clarifications on the legal status, started regulating certain activities, or issued an outright ban. However, the responses vary, depending to some degree on the part of the world from which they originate and on the type of authority.

Is cryptocurrency legal in Albania?

Do you have questions about cryptocurrency, digital currencies, or blockchain technologyFreeman Law can help with digital currencies, tax planning, and tax compliance.   Contact us now or Schedule a consultation or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.

 


[1] Attention à l’argent virtuel, comme Bitcoin [Beware of Virtual Currencies, Such as Bitcoin], BNB, FSMA (Jan. 15, 2014), https://www.nbb.be/fr/articles/attention-largent-virtuel-comme-bitcoin, archived at https://perma.cc/H457-2T49; https://www.nbb.be/en/articles/press-release-digital-currencies-threats-and-opportunities-monetary-policy

 

[2] European Central Bank (2015), ‘Virtual Currency Schemes – a further analysis’, https://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemesen.pdf, p. 4.