Belgium -- Stablecoin Regulations Regulatory Overview

The regulatory framework for stablecoins in Belgium is primarily governed by the Markets in Crypto-Assets Regulation (MiCA) at the European Union level, which is directly applicable in all EU member states, including Belgium. While MiCA is being phased in, with full applicability for stablecoins from 30 June 2024 (for ARTs) and 30 December 2024 (for EMTs), it provides the definitive framework.

Before MiCA's full applicability, the regulatory landscape was less specific for stablecoins, requiring a case-by-case assessment based on existing financial laws (e.g., e-money or securities regulations) to determine if they fell under their scope.

In Belgium, the primary competent authorities for crypto-assets and financial services are:

• National Bank of Belgium (NBB): Supervises credit institutions, payment institutions, electronic money institutions, and will be the competent authority for issuers of e-money tokens (EMTs) and often for asset-referenced tokens (ARTs) depending on the issuer.
• Financial Services and Markets Authority (FSMA): Supervises financial markets, investment services, and will also have a role in the supervision of ART issuers, especially if the issuer is an investment firm or other supervised entity, and for whitepaper approvals.

Regulatory Framework for Stablecoins in Belgium (Under MiCA)

MiCA introduces a specific regulatory regime for stablecoins, categorizing them into two main types:

1. Classification of Stablecoins:

   • E-money Tokens (EMTs): These are crypto-assets that purport to maintain a stable value by referencing the value of one single fiat currency (e.g., a token pegged to EUR or USD). They are essentially a digital form of electronic money.
   • Asset-Referenced Tokens (ARTs): These are crypto-assets that are not EMTs and purport to maintain a stable value by referencing any other value or right, or a combination thereof, including one or several fiat currencies that are not legal tender, one or several commodities, or one or several crypto-assets.
   • Payment Tokens / Securities: Stablecoins that meet the definition of EMTs or ARTs under MiCA will be regulated under MiCA, and generally not as traditional "payment tokens" (unless they are simply utility tokens used for payment within a limited network) or "securities" (unless they fail to meet MiCA's stablecoin definitions and instead qualify as transferable securities under existing securities law). MiCA aims to provide a sui generis regime for crypto-assets.

2. Reserve Requirements:

   • 100% Backing: Issuers of ARTs and EMTs must at all times maintain a reserve of assets that is separate from their operational funds and covers 100% of the value of the outstanding stablecoins.
   • Segregation and Custody: Reserve assets must be segregated from the issuer's own assets and held in custody by credit institutions or other authorized entities, ensuring safety and liquidity.
   • Investment Restrictions: Reserve assets must be invested in highly liquid instruments with minimal market risk. For EMTs, the reserve assets must be invested in secure, low-risk assets denominated in the same currency as the EMT.
   • Prudential Requirements: Issuers must hold a minimum amount of own funds, proportionate to the amount of stablecoins issued, to absorb potential losses.

3. Issuer Licensing (Authorization):

   • Authorization Required: Issuing ARTs or EMTs requires prior authorization from the competent authority (NBB or FSMA in Belgium, depending on the token type and issuer characteristics).
   • ART Issuers: An entity wishing to issue ARTs must be a legal entity established in the EU and obtain authorization as an issuer of ARTs. The NBB will likely be the primary authority, especially if the issuer is a financial institution, or in coordination with the FSMA.
   • EMT Issuers: Issuers of EMTs must either be an authorized credit institution or an authorized electronic money institution (EMI). In Belgium, EMIs are supervised by the NBB under the Law of 11 March 2018 (transposing EMD2).
   • Whitepaper: Issuers must publish a comprehensive whitepaper, approved by the competent authority, containing detailed information about the issuer, the stablecoin, its underlying technology, risks, and redemption rights.

4. Redemption Rights:

   • At Par Redemption: Holders of ARTs and EMTs have the right to redeem their tokens from the issuer at any time, at par value (i.e., for the amount of fiat currency or assets they represent), and without undue delay.
   • Transparency: Issuers must clearly disclose the redemption policy, including any fees or conditions.

5. Algorithmic Stablecoin Rules:

   • MiCA is primarily designed for asset-backed stablecoins. It does not provide a specific regulatory framework for purely unbacked algorithmic stablecoins.
   • Effectively, stablecoins that purport to maintain a stable value without holding a reserve of assets to back them are not covered by MiCA as either ARTs or EMTs and would largely be prohibited from operating at scale within the EU, as they would not meet the stringent reserve and redemption requirements. While not an explicit ban on all algorithmic mechanisms, it effectively mandates sufficient backing, making purely unbacked algorithmic models non-compliant for public issuance in the EU.

6. CBDC Interaction (Digital Euro):

   • The European Central Bank (ECB) and the European Commission are actively exploring the development and potential issuance of a digital euro, which would be a Central Bank Digital Currency (CBDC) for the Eurozone.
   • Distinct Nature: A digital euro would be a direct liability of the ECB and would be legal tender, offering the highest level of safety and trust, unlike private stablecoins (EMTs or ARTs) which carry issuer and market risks.
   • Coexistence and Competition: While the digital euro is intended to complement cash and private payment solutions, not replace them, it would provide an alternative, risk-free digital payment option. This could lead to competition with private stablecoins, potentially influencing their adoption and stability.
   • Regulatory Alignment: The framework for a digital euro (if issued) would be established through separate EU legislation, potentially incorporating elements similar to MiCA for distribution and access, but with the fundamental difference of being central bank money.

Specific Legislation and Regulatory References

1. Markets in Crypto-Assets Regulation (MiCA):

   • Regulation (EU) 2023/1114 on markets in crypto-assets, and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937.
   • URL: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023R1114

2. Belgian Law on Payment Services and Electronic Money Institutions (Pre-MiCA relevance for EMIs):

   • Loi du 11 mars 2018 relative aux services de paiement, aux établissements de monnaie électronique, à l'accès aux systèmes de paiement et aux exigences concernant les prospectus pour les jetons de paiement. (Law of 11 March 2018 on payment services, electronic money institutions, access to payment systems, and prospectus requirements for payment tokens). This law transposed PSD2 and EMD2 into Belgian law, relevant for entities that might issue EMTs under MiCA.
   • URL: https://www.ejustice.just.fgov.be/cgi_loi/loi_a1.pl?imgcn.x=10&imgcn.y=9&DETAIL=2018031139%2FF&caller=image_a1&lan=f&ligne=1 (French version - Moniteur Belge)

3. Belgian Competent Authorities (General Information):

   • National Bank of Belgium (NBB) - Crypto-assets:
     • URL: https://www.nbb.be/en/payments-and-securities/payment-systems-and-market-infrastructures/new-technologies-and-digital-currencies
   • Financial Services and Markets Authority (FSMA) - Crypto-assets:
     • URL: https://www.fsma.be/en/crypto-assets

4. European Central Bank (ECB) - Digital Euro project:

   • URL: https://www.ecb.europa.eu/paym/digital_euro/html/index.en.html

This comprehensive framework under MiCA aims to provide legal certainty, foster innovation, and ensure consumer protection and financial stability within the stablecoin market in Belgium and across the EU.