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On 17 March 2023, a Royal Decree approved the FSMA’s regulations containing restrictive conditions regarding the commercialization of virtual coins. With these regulations, the Belgian legislator has given the go-ahead for the implementation of a regulatory framework on the use and commercialization of virtual coins and its restrictions. An extensive Belgian and European regulatory framework already exists for the commercialization of financial products (investment instruments), including the MiFID Directive and the Prospectus Regulation. However, the commercialization of virtual coins is slipping through the net, leaving consumers with little or no protection. This has prompted the Belgian legislator to intervene.

1. Justification

At European level, there has already been an initiative to subject the cryptocurrency market and virtual coins as such to a binding regulatory framework since 2020, being the MiCa regulation. By approving the FSMA’s regulation, the Belgian legislator is introducing a Belgian regulatory framework with regard to restricting the commercialization of virtual coins, given the exponential increase in the popularity of virtual coins over the past few years. Notable in the commercialization of virtual coins is that consumers are confronted with advertisements not only through traditional channels, but also through social media. It was for this reason that the FSMA felt obliged to regulate these practices. Besides the increasing popularity among consumers, the FSMA refers to the risky nature of virtual coins to justify the introduction of the regulation. Indeed, virtual coins are susceptible to sudden fluctuations in value and are also subject to additional technical risks, causing consumers to suffer large losses during 2022.

2. The restrictions

Any advertisements disseminated in Belgium after 17 May 2023, either as a professional activity or on an occasional basis for payment, towards consumers for the purpose of commercializing virtual coins, will have to comply with the terms of the regulation. Pre-existing advertisements have to comply with the obligations of the regulation by 17 June 2023 at the latest. The regulation provides for three types of restrictive measures: (i) substantive conditions to be met by the advertisements, (ii) some mandatory disclosures that advertisements must contain and (iii) a supervisory regime by FSMA for mass campaigns. Through the substantive conditions and the mandatory disclosures, the FSMA seeks to inform consumers of the risks associated with virtual coins to ensure that consumers are sufficiently and correctly informed to make an informed choice. With regard to advertisements distributed on a large scale, the so-called “mass campaign” (distribution by a person with at least 25,000 followers on social media and distribution in return for payment by a social media platform), the FSMA provides for an additional obligation in its regulation. When conducting such mass campaign, the distributor of the advertisement has to notify the FSMA of the format, nature and content of the advertisement ten days prior to its distribution.

3. Sanctions

In the event that advertisements are being distributed in manner that does not comply with the conditions of the regulation, the FSMA has two sanctions it can cumulatively impose on the distributor of the advertisements. On the one hand, it may order the distributor of the advertisements to stop the distribution under penalty of a fine. On the other hand, it can impose a substantial administrative fine on the distributor in case of a breach of the regulation. This administrative fine can be increased according on the profit made from the distribution of the advertisements.

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