Guide to Mandatory Registration as a Crypto Business in Belgium

On May 1st, 2022, the Belgian Royal Decree on the “status and supervision of service providers for the exchange of virtual currency and fiat currency and custodian wallet providers” (“the Decree”) will come into force. The Decree clarifies the registration procedure for crypto businesses willing to start or pursue their operations in Belgium.

Since registration is mandatory under Belgian Anti-Money Laundering (AML) regulations, businesses better pay close attention to the requirements. Active crypto services that don’t apply for registration by September 1st, 2022 may face considerable fines. Let’s dive into the finer details.

Who’s affected

The registration rule applies to crypto businesses established in Belgium. This includes the following services:

• exchange services between virtual and fiat currencies (crypto-to-fiat exchanges);
• custodian wallet providers.

The Decree specifies that entities providing such services on an additional or ancillary basis must register as well. This refers to those regulated by the National Bank of Belgium and the Financial Services and Markets Authority (the FSMA).

The obligation to register also extends to businesses established in the EU or the EEA operating in Belgium through a branch or representative. This includes operators of ATMs enabling crypto-to-fiat exchange on Belgian territory.

According to Belgian AML law, crypto businesses established outside the EU/EEA are banned from providing their services in Belgium.

The legal landscape for crypto businesses in Belgium

In Belgium, crypto businesses fell into the AML scope on July 20th, 2020. That’s when the AML Law of 18 September 2017 was amended in line with the European Fifth AML Directive (5AMLD).

These amendments took crypto-to-fiat exchanges and wallet providers operating in Belgium out of a legal gray area, subjecting them to:

1. The same AML obligations as traditional financial institutions, i.e.:

• implementing internal AML policies;
• performing risk assessment;
• conducting customer due diligence (CDD) and enhanced due diligence (EDD);
• reporting suspicious transactions;
• keeping records;
• appointing a compliance officer;
• educating personnel.

2. Mandatory registration with the Financial Services and Markets Authority (FSMA), the main AML supervising authority in Belgium. This entitles the FSMA to supervise how Belgian crypto businesses comply with AML law.

Although registration rules for crypto firms were introduced by the amended AML Law in 2020, it’s only in 2022 that the Decree on registration requirements and deadlines comes into force.

How to register with the FSMA

The FSMA will maintain two registers, one for exchanges and another for custodians. Businesses can apply for one or both. The application fee is €8,000 per registration in one of the two registers (accordingly, €16,000 for both).

To register with the FSMA, businesses must meet the criteria set by the Decree.

1. Corporate form and minimum capital requirements

Belgian crypto businesses must have minimum capital of €50,000 and be established under one of the acceptable corporate forms:

• public limited company;
• cooperative company;
• European company;
• European cooperative company.

Legal descriptions of these corporate forms are provided in the Belgian Companies and Associations Code.

2. Executive manager requirements

The FSMA specifies that executives of crypto businesses seeking registration must have “the appropriate expertise and the professional integrity”. While this criterion hasn’t been fully clarified, the Decree does specify some prohibited cases in the Article 20 of the law of April 25, 2014 on the status and supervision of credit institutions and brokerage firms.

3. Stakeholder requirements

Crypto businesses must provide the FSMA with information on stakeholders. This means identifying those who:

• hold at least 5% of the company, with exact shareholder amounts specified;
• persons who exercise control.

Stakeholders and persons who exercise control must have the necessary qualities with “regard to the need to guarantee sound and prudent management.” The FSMA hasn’t clarified how they will assess compliance with this requirement.

4. AML compliance requirements

Crypto businesses must comply with the amended AML Law of 18 September 2017. This can be done by implementing an AML compliance program with an independent internal audit.

Suggested read: What Makes an AML Compliance Program Effective?

The FSMA has developed a checklist of information and documents that are mandatory for application, which will be available from May 1st, 2022.
Applications must be sent to [email protected]. The FSMA will make a decision within three months of receiving the application file.

Deadline

The Decree sets a transitional regime so that active crypto businesses can continue operating under temporary authorisation until the FSMA’s decision on their application.

July 1st, 2022: the deadline for active businesses to notify the FSMA that they provide services falling under the registration requirement.

September 1st, 2022: the deadline for submitting a complete registration file.

Sanctions

Businesses that continue to provide services without registration may be sanctioned to imprisonment from one month to one year and/or a fine of 50 euros to 10,000 euros.

Key takeaway

Two years after their introduction, registration requirements are finally coming into force for crypto companies in Belgium. There’s not much time left until the registration deadline, so businesses better prioritize the application process. And since AML compliance is one of the key registration requirements, implementing an effective AML program should be a top priority.