Virtual Currencies Comparative Guide

• Published date: 11 October 2022
• Subject Matter: Technology, Fin Tech
• Law Firm: Gil Figueira & Devillet Lima
• Author: Mr Jo'o Gil Figueira and Catarina Andrade Miranda

1 Legal and enforcement framework

1.1 In broad terms, which legislative and regulatory provisions govern virtual currencies in your jurisdiction?

In Portugal, there is no specific legislation governing virtual currencies or cryptocurrencies. Therefore, there is no general prohibition on acquiring, holding or disposing of cryptoassets or virtual currencies.

Nevertheless, several laws regulate various aspects of businesses and transactions carried out using virtual currencies. The existing laws and regulations may apply directly or by analogy.

Depending on whether a given virtual currency qualifies as a particular asset class and whether a particular method of distribution and sale is used, the provisions of various statues may apply, such as:

• the Securities Code (Law 83/2017), as amended;
• the Anti-money Laundering and Prevention of Terrorism Financing Law;
• the Data Protection Law; and
• to some extent, consumer protection laws.

A case-by-case analysis is required to understand the legal consequences and implications of a given transaction.

1.2 In broad terms, which legislative and regulatory provisions govern entities that provide services relating to virtual currencies? Must they be registered or licensed by a regulatory authority?

There are no licensing requirements for users to acquire, hold or dispose of virtual currencies that do not qualify as securities.

Under the Anti-money Laundering and Prevention of Terrorism Financing Law, virtual asset service providers (VASPs) doing business in Portugal must register with the Bank of Portugal. Registration is required prior to commencing their activity in Portugal.

VASPs include all individuals and corporations (or any other entities) that:

• engage in exchange services between virtual assets and fiat currencies;
• engage in exchange services between one or more forms of virtual assets;
• provide services that allow the transfer of virtual assets from one address or wallet to another; or
• provide custodian wallet services.

The transposition of EU Directive 2018/843 amending EU Directive 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU, into the Portuguese legal framework has led to the need to register VASPs.

1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

The Bank of Portugal and the Securities Market Commission (CMVM) are the two prominent regulators that oversee the legal framework that generally applies to virtual currencies and crypto assets.

The Bank of Portugal is Portugal's central bank and is responsible for the supervision of credit and payment institutions. The CMVM supervises and regulates the securities and financial instruments markets and entities operating within those markets. It is also competent for assessing compliance with the applicable legal and regulatory provisions governing the prevention of money laundering and terrorist financing.

The laws applicable to each asset will vary significantly depending on its specific characteristics - in particular, whether the asset qualifies either as a security (ie, a security token) or as a utility token. The issuance of security tokens falls within the scope of the CMVM's regulatory powers.

Insofar as virtual currencies do not qualify as financial instruments, advisory and management services would fall outside the scope of the laws regulating investment services and the CMVM's licensing powers.

1.4 What is the regulators' general approach to virtual currencies?

The Portuguese regulators are keen to point out the risks of investing in virtual currencies and cryptoassets, and have issued several warnings and notices on this matter.

Banco de Portugal has been vocal on consumer/investor protection. It has issued several public statements and warnings concerning cryptocurrencies, in line with the regulatory practices of other eurozone central banks and European regulatory authorities, such as the European Central Bank and the European Banking Authority.

The CMVM has published several warnings addressed to investors, also in line with other European regulatory authorities such as the European Securities and Markets Authority.

1.5 Has there been any notable enforcement action relating to virtual currencies?

No.

2 Definitions

2.1 How are 'virtual currencies' defined in your jurisdiction? Have there been any judicial decisions which have helped to define virtual currencies or their interplay with the existing body of laws (eg, contracts law...