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Belgium further regulates crypto exchanges and wallet providers, while banning non-EEA ones

Publications | Dieter Veestraeten / Jan van Loon

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Very quietly and relatively rapidly a new set of legislation amending the Belgian anti-money laundering act of 18 September 2017 was introduced and voted in Belgian Parliament in the course of January 2022, expanding the regulation of virtual currencies.

Although the Belgian AML Act already included certain provisions and obligations in this respect (based on European legislation), the inclusion of further (registration) requirements in the same Act is debatable and seems to shed an unnecessary negative light on virtual currencies, including cryptocurrencies.

The new rules require certain providers engaged in exchange services between virtual currencies and fiat currencies as well as custodian wallet providers to be registered in Belgium. But above all they go so far as banning such providers when they are established in a third country without having an establishment in the European Economic Area.

Registration requirements

Exchanges between virtual currencies and fiat money are defined in the Act as: “services that consist of purchase and selling transactions, with own capital, whereby virtual currencies are exchanged for fiat currency or fiat currency for virtual currencies”. Virtual currencies should be understood as: “a digital representation of value that is not issued or guaranteed by a central bank or government, that is not necessarily linked to a legally established currency and that does not have the legal status of currency or money, but that is accepted by natural or legal persons as a medium of exchange and that can be transferred, stored and traded electronically”. This means that the definition is broader than mere cryptocurrencies, but can also apply to currency used and exchanged in games.

Providers of custodian currency wallets (defined as: “an entity that provides services to secure cryptographic private keys on behalf of its clients to hold, store and transfer virtual currency”) also fall under the new legal framework.

Only those exchange and wallet providers that are located in Belgium fall within the scope of application. However, this includes providers that have a branch office in Belgium or which have located electronic infrastructure in Belgium to provide such services. The main example hereof, which is specifically targeted by the legislation, are ATMs to exchange virtual currency, whatever their origin is.

Previously, the AML Act already provided that the effective leaders of these providers had to show professional reliability and adequate suitability to run their business. Businesses could also be refused when shareholders holding at least five percent of the shares of the company (or, what is new, controlling the company from a corporate law perspective) were deemed inadequate. Further rules are still to be determined.

What is new is that the supervisory authority, the FSMA, will maintain a register of all of these service providers. A failure to register when providing such services may lead to criminal sanctions set at a prison sentence between one month and a year and a fine of 400 to 80.000 euros. The same penalty applies to providers that continue to provide services despite the fact that their registration was annulled or after having breached their obligations under the law. The FSMA is also entitled to impose administrative fines up to 2.500.000 euros.

Prohibition on non-EEA services

More important is that providers which have as a professional activity virtual currency/fiat currency exchanges and/or wallets, even if these services are ancillary or complementary, and which are governed by non-EEA law, are prohibited from providing these services in Belgium.

Despite criticism from the Council State, that oversees the quality of legislation and called this ban disproportional, the government maintained this ban as the lack of a link in Belgium, or an entity in the European Union, would be detrimental for the effectiveness of supervision on these entities.

Fintech, crypto and DeFi solutions cooperating with such providers may have to review whether or not they can continue to provide services linked with non-EEA solutions in Belgium.


The new Act was approved in Parliament at the end of January 2022 and is set to enter into force soon. The supervisory authority (FSMA) expects that the new rules will initially apply to less than twenty providers.

It should be reminded that the European Commission is contemplating a similar ban in its proposed Markets in Crypto Assets (MiCA) regulation that is being discussed between the European institutions. Certain countries, such as The Netherlands, have already introduced such a ban. MiCA is also likely to introduce a registration requirement that is similar to the new Belgian solution.

As individual member states are increasingly looking at introducing new rules governing virtual and cryptocurrencies, the need for a uniform European approach that counteracts a fragmented virtual market across the EU and that looks at both the risks and benefits of blockchain, cryptocurrencies and decentralized finance, is growing.