The Royal Decree of 8 February 2022, which lays down the rules and conditions for the registration of providers of exchange services between virtual currencies and legal currencies, will apply from 1 May 2022 to both natural persons and legal persons established in Belgium who offer to provide, or who provide :

(a) exchange services between virtual and legal currencies,

(b) custody portfolio services and

(c) providers of services for the distribution of banknotes converted from virtual currencies (ATMs).

Only providers under Belgian law and providers under the law of another Member State of the European Economic Area who have a branch or any other form of permanent establishment in Belgium are subject to the registration requirement.

The concept of permanent establishment is to be understood in the sense of the case law of the Court of Justice of the European Union in this area (representatives, distributors, etc.). Electronic infrastructures installed on Belgian territory, through which legal persons governed by the law of another Member State offer services related to virtual currencies (i.e. ATM's) are considered as permanent establishments within the meaning of the regulation.

Furthermore, given the risks that exchange services between virtual currencies and legal currencies and custody portfolio services represent in terms of money laundering and terrorist financing and potentially also for Belgian financial stability, and given the uncertainty as to the regulations applicable outside the European Union natural or legal persons governed by the law of a third country (i.e. which is not a member of the European Union) are prohibited from offering to provide or providing, on Belgian territory, as a regular professional activity, even if complementary or ancillary, exchange services between virtual currencies and legal currencies or custody wallet services.

Legal persons who were already providing such services before 1 May 2022 will be able to continue their activities on a provisional basis until FSMA decides on their application for entry in the register, subject to notification to FSMA by 30 June 2022, followed by an application for entry submitted by 31 August 2022 at the latest.

Failure to do so will result in the withdrawal of their authorisation.

For further information, please contact Mr David Szafran (david.szafran@cew-law.be)