In plenary session next Thursday, the Federal Parliament will have to express its opinion on the decision of the Technology Advisory Committee. The result of nearly two years of work and hearings, this text asks the executive branch to strengthen the framework for the use of cryptocurrencies and their societal, financial and environmental impacts.
Context: This is because the advisory committee has set itself the task of taking on as many of the issues posed by cryptocurrencies for regulation as possible. But regulation does not mean prohibition or rejection. It is a matter of making judgments so that every citizen who sets out first realizes what he is doing. There is no doubt that it is too late. But if we don’t, it will be worse.” Committee chair Gilles Vanden Burre (Ecolo) told us: On the occasion of the first hearings of a programme, it was to invite about thirty experts from different backgrounds to express themselves on the subject.
Whether or not the slowness of the process or the content of the resulting resolution is criticized, federal MPs will at least dig into the matter. This is by discussing with Cipher writer Satoshi Nakamoto quotedAnd consumer representatives and managers Energy supplier who have experience in this industry such as Hydro-Québecthinking heads from the central bank or even market power.
lessons: As a result of this project, the Technology Advisory Committee selected about thirty community issues related to cryptocurrency:
- the impact on the financial sector, given in particular that 10% of Belgian households own these digital assets, according to a study by the European Central Bank (ECB); the importance of developing the European crypto-asset market “with a view to neutrality and stability”;
- Environmental impact, given that “a transaction on the Bitcoin blockchain costs $160, consumes 1,000 KWh (one-third of the average annual consumption of a Belgian household) and generates 300 grams of e-waste,” calculates Professor Bart Brennell of KU Leuven
- the growing adoption of cryptocurrencies globally within companies such as PayPal, Visa, Tesla, Mastercard, and states such as El Salvador, Ukraine, and Vietnam; “Technological and economic opportunities represented by cryptocurrencies and blockchain within the context of responsible, regulated and sustainable use”; the need for a legislative framework to “enable innovation in a sustainable and inclusive manner”;
- high volatility in crypto assets; the need to inform consumers of the “risks inherent in speculative investments”; the “vulnerability of younger audiences” to these risks “inherent in cryptocurrency”;
- the number of crypto-assets escaping current European financial regulation; the lack of clarity on the tax framework applicable to income generated from crypto assets, as well as to any realized capital losses or capital gains;
- The increase in police investigations related to crypto assets, especially in light of the statistics reported by Belgium before Federal Computer Crime Unit; The need to combat fraud and money laundering. the lack of federal authorities in the necessary means and tools to ensure full financial oversight; Difficulties faced by prosecutors in confiscating cryptocurrency assets.
A rapidly changing environment
In short, the federal deputies on the advisory committee haven’t made any real breakthroughs in digital currency regulation. Without waiting for this parliamentary action to end, the encrypted planet continued its revolutions, punctuated by major earthquakes (Terra Luna, Celsius, FTX, etc.). The European Union has also made great strides in developing its own regulations for crypto-asset markets (Crypto asset marketsMiCA), while the European Central Bank is finalizing the study phase aimed at creating a digital euro.
As MPs analyzed and reflected, Belgian legislation changed, with crypto-related service providers (exchanges, custodians, distributors) obligated to register with the Financial Markets Authority (FSMA). The tax system is not clarified due to, among other things, the status of mandatory reporting for foreign accounts holding crypto assets and the technical limitations imposed by reporting systems. Not to mention the obstacles to the development of the digital asset ecosystem in Belgium by the banking industry, which is characterized by the difficulties faced by crypto entrepreneurs to obtain a simple bank account.
The Ten Commandments
However, the Advisory Committee on Scientific and Technological Questions has the advantage of finally documenting the topic of cryptocurrency. As a result, the deputies are asking the federal government to finally look into all these issues related to bitcoin and its ecosystem. Thus, the parliamentary resolution recommends that Alexandre de Croo’s team take 10 actions in this area:
1. Support for MiCA and related initiatives
This goes without saying, but parliamentarians are asking the federal government to uphold European regulations in crypto-asset markets, thus, advocating a classification of the environmental footprint of cryptocurrencies to take into account as much as possible the “absorption costs related to CO2 emissions.”2 and energy consumption across the entire value chain”; b) so that “only crypto-asset models that achieve a perfect green rating will be encouraged by public incentives.”
Following the same reasoning, the MEPs are calling on the government to “promote benign blockchain models that can develop common rules to stave off problematic, fraudulent and energy-intensive behaviour.”
2. Introducing the “MiCA Sticker”
The parliamentarians expect the competent ministers to materialize the future MiCA regulation at the Belgian level and the European classification of crypto-assets thanks to the creation of a quality label that guarantees and classifies cryptocurrencies according to ecological footprint, innovation and reliability.
3. Raise awareness
Largely inspired by the projects of the FSMA and the future framework presented by the MiCA, the parliamentarians’ decision requires that a warning of the risks inherent in financial and speculative investments be displayed for each advertising message.
4. Youth protection (older)
Following the logic of financial education, the federal government is required to run information campaigns and programs specifically for young people. It is also required to ensure that advertising of cryptocurrency exchange platforms does not target minors.
5. Training of federal cryptographers
Federal deputies call on ministers and state secretaries to create, in the federal administration and federal agents, “expertise in the form of working groups and trainings” on technologies related to blockchain and cryptocurrency. The parliamentary text insists on the fact that at the same time maintaining a special concern regarding the “risks that exist around anonymity”.
“Create a national ecosystem to stimulate innovation”
6. Support the use of the blockchain
Parliamentarians direct the government to support the use of blockchain within the federal administration and public institutions linked to the federal level and in projects developed by the federal government. The text asks the executive to put in place the necessary regulations to “incentivize and facilitate such use, in a sustainable and comprehensive perspective.”
The government is also expected to support public-private cooperation with the aim of creating a “national ecosystem” to stimulate innovation, diffusion and development of blockchain-related technologies.
7. A wallet for everyone
It is also a matter of giving every citizen a decentralized digital data wallet that works thanks to blockchain technologies, “in connection with the directives and management of the European Central Bank.”
8. Tax clarification
Federal MPs are calling on the government to clarify the scope of banking, exchange, credit and savings institutions in the context of various forms of custody of crypto assets. This is, “in order to remove any ambiguity regarding the obligation to declare personal income tax and to remove technical hurdles associated with the obligation to declare foreign accounts in cryptocurrencies.” Ideally, the parliamentary text insists, before the deadline for filing tax returns for the 2023 income year and the 2024 tax year.
On the tax front, the Advisory Committee requests clarification of the tax classification of income from crypto assets and an examination of the advisability of providing a specific legal framework for the tax treatment of crypto assets in accordance with the European regulatory framework.
9. Equip justice
The Technologies Advisory Committee urges the government to provide the Attorney General’s offices with technical and human resources so that they can seize assets in cryptocurrency.
10. Equip the police
Federal MPs expect Alexander De Croo’s team to provide the necessary resources and training for Federal Computer Crime Unit To tackle cryptocurrency fraud as well as to promote international cooperation.