Cryptocurrency Licence in Portugal

Responsibility of Businesses to Register with the Bank of Portugal

Right after the implementation of the Law, engagement in activities with cryptocurrencies and other virtual assets professionally had become a subject deserving registration with the Bank of Portugal before the onset of operation. Virtual assets refer to any sort of digital representation that has a certain value.

Even though it is not legal tender, this type of currency is accepted as a way of investing or exchanging. These virtual currencies can be hoarded, transferred, and even traded via electronic means. And therefore, certain economic activities when operated in the name of or on behalf of a client are regarded as financial activities with virtual assets. These may include exchange services between fiat and virtual currencies, exchange between more than one virtual asset, transfer service of virtual assets, and safeguarding virtual assets and administration services.

Right after the implementation of the Law, it has become mandatory for institutions engaging in financial activities on a professional basis to register with the Bank of Portugal. This is applicable to all the organizations that take part in activities concerning virtual assets in the country. The Bank of Portugal has also highlighted certain risks related to transactions with cryptocurrencies.

• Virtual assets do not fall under the category of legal tender. This implies that there is no compulsion to take it at face value
• In case there is partial or complete depreciation of virtual assets, there is no protection to cover against the losses
• Also, there is no legal protection for those making payments with virtual assets which is in sharp contrast to the regulated mode of payment

The granting, as well as maintenance of this registration process with the Bank of Portugal, is based on assessing the suitability and competence of the business that applies. For this reason, it is important for the applicant to include some essential information while applying for registration. These include information on the entity of the applicant, the UBOs, shareholding holders, business plans along with internal procedures, members constituting the supervisory and management bodies, and lastly, the steps taken for preventing terrorist financing and money laundering.

The business organizations that take part in financial activities with virtual currencies in Portugal under the regulation of free provision of services are not entitled to the duty of prior registration given in Article 112/A of the Law to Combat Money Laundering and Terrorist Financing which is mandated by the Notice 3/2021.

Supervisory Steps Taken by the Bank of Portugal

The Bank of Portugal takes care of the supervision of the entities to carry out various activities with virtual assets in the country. As a result, these entities are subject to the following requirements of registration:

• Companies operating in Portugal for engaging in economic activities with virtual assets
• Legal or natural entities established or domiciled for conducting business in virtual assets in Portugal
• Other businesses or individuals engaging in financial activities with assets have to submit a declaration of the start of their activities concerned with the Portuguese Tax and Customs Authority.

These imply that the various aspects of connection with Portugal other than the ones already mentioned above will be regarded by the Bank of Portugal as being outside the scope of their supervision. As a result, those entities that are currently engaging in activities with virtual assets in Portugal will not be included under the free provision of continuing financial services.