Cryptocurrency Licence in Portugal
The Bank of Portugal published a notice on April 23rd, 2021 stating the regulation procedure for business organizations to carry out activities in virtual assets. It is provided in Article 112/A of the Law dated August 18th 2021. It was the Law to Combat Money Laundering and Terrorist Financing that was introduced under the pretext of incorporating the Directive of the European Parliament into Portuguese Law.
Since September 1st 2020, the Central Bank of Portugal has taken over the functions of the business activity in the zone of virtual currencies. This competent and responsive authority is carrying out the registration process of obliged entities. But it’s worth noting that the responsibility of the bank with respect to the organization operating on virtual assets is not applicable to areas of banking, prudential, or any other operations.
Cryptocurrency Licence in Portugal and Legal Framework
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.
Timeline to Get the Cryptocurrency Licence in Portugal
Our experience shows that it takes 6-9 months on average to receive a cryptocurrency licence in Portugal. This timeline also includes all necessary preparations and regulatory deadlines.
Requirements for the Directors of the Company
The Bank of Portugal requires the executives of Portuguese crypto companies applying for registration to have “relevant experience and professional integrity.”
Also, the director needs legal status to work in Portugal, and the AML officer must also meet the requirements in accordance with Directives 2015/849/EU of 20.05.2015 and 2016/2258/EU of 06.12.2016 of the European Parliament and Council.
Requirements for the Stakeholders
Cryptocurrency companies must provide the Bank of Portugal with information about stakeholders for those who:
– owns at least 5% of the company’s shares;
– exercises control.
Significant shareholders and persons exercising control must have the necessary qualities with regard to the need to guarantee sound and prudent management.
Our Portugues Lawyers will Help You with:
Preliminary analysis of the desired business model;
Company formation in Portugal;
Drafting all required compliance manuals;
Applying for cryptocurrency licence in Portugal;
Arranging a legal address for the company. If necessary, assistance in finding a separate office and hiring qualified personnel;
Paying all state and notary fees;
Legal, banking and accounting advice.