Belgium Regulator FSMA Issues Ban Of Virtual Currency-Based Derivatives Effective July 1

The Financial Markets and Services Authority (FSMA) has announced a new regulatory edict that will effectively ban the use of

The Financial Markets and Services Authority (FSMA) has announced a new regulatory edict that will effectively ban the use of derivatives based on virtual currencies such as Bitcoin as of July 1, 2014, according to an FSMA statement.

Belgium’s paramount regulatory organization FSMA has been keen to police a variety of financial instruments as of late, including binary options. However, the most recent FSMA regulatory announcement takes a far more pointed stance towards virtual currencies.

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The announcement comes on the heels of a warning from both FSMA and the National Bank of Belgium, which outlined the potential risks associated with virtual currencies such as Bitcoin. These included an overall prevalence for operating risk, hacking virtual currency platforms, exchange rate risks and volatility, and the lack of legal guarantee for actual face value. For these reasons, FSMA has sought to curb the use of virtual currencies related to derivatives, which it believes can potentially exacerbate these risks.

Despite news of the announcement permeating would-be investors and virtual currency users alike, the price of Bitcoin seemed unruffled by the news, jumping 10% today. Ultimately, it remains to be seen if FSMA’s regulatory stance will be adopted by other European countries.

 

 

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