Registration in the Portuguese Central Bank
If you have a company that deals with cryptocurrencies or crypto assets, OR any other digital asset, in Portugal, this article is for you. A small resume of CRYPTOCURRENCY & BLOCKCHAIN LAW IN PORTUGAL.
Back in 2018, the EU introduced the Anti-Money Laundering Directive V of the European Parliament and Council, henceforth referred to as AMLDV or the Directive, which you can find here.
The objective of the AMLDV reinforce and control money laundering procedures within the EU as well as terrorism financial support, how the EU intends for the Directive to take effect.
One important aspect of the Directive is to regulate virtual transactions and virtual assets, as they’re perceived by the EU, as a way to launder money or finance terrorism.
If you are settled in Portugal this is for you:
Portugal has already put in force the ALMDV to national law back in August of 2020, with the law n.º 58/2020, de 31 de Agosto that changed the law 83/20217 of 18 of August, and in our short article, we will focus on the two documents that regulate companies that deal with virtual or crypto assets.
Who is covered by this Law?
- Entities that carry out any activity with virtual assets/ cryptocurrency
- Any entity (individuals or companies/business), that is incorporated in Portugal to carry out any activity related to crypto or virtual assets;
- Other Individuals or companies/businesses, due to the exercise of activities with virtual assets/cryptocurrencies, are required to submit a declaration of commencement of activity with the Tax and Customs Authority.
What is understood by a virtual asset?
The law also defines virtual assets as: “a digital representation of value that is not necessarily linked to a legally established currency and that does not have the legal status of fiat currency, but that is accepted by natural or legal persons as a means of exchange or investment and that can be transferred, stored and marketed electronically”.
In our opinion this a quite broad definition that compromises all digital assets, such as cryptocurrencies, NFTs (non-fungible tokens), any other similar.
“Non-fungible tokens (NFTs) are unique, digital items with blockchain-managed ownership. Examples include collectibles, game items, digital art, event tickets, domain names, and even ownership records for physical assets.”
“A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers.” as is referred to in Investopedia.
Which activities are covered?
The law 83/2017 de 18 de Agosto, with establishes as companies or individuals dealing virtual assets the following:
- Companies that provide exchange services between virtual assets/ cryptocurrency for fiat currency and vice versa.
- Companies that provide exchange services between one or more virtual assets / cryptocurrencies.
- Companies that provide services to move and transfer virtual assets / Cryptocurrencies from a virtual address or wallet to another. Transfer of virtual assets.
- Companies that manage or safekeeping any kind of virtual assets. Or manage instruments that control, detain, save or transfer said assets, including private crypto keys.
My company is dealing with cryptocurrency in Portugal, what is the consequence?
If you wish to establish or operate a company that deals exclusively, or simultaneously with other activities, with virtual assets you must first register yourself with the Banco de Portugal (Portuguese Central Bank) and comply with the following steps, determined by Banco de Portugal in this public notice.
Registration procedures with the Banco de Portugal If you or your company fall under any of the above categories and you require to register with the Banco de Portugal by submitting a registration application with the Bank of Portugal, sending the notification model provided by the Central Bank, duly completed and accompanied by all the documentary elements specified there. This procedure is not yet final, since the procedure is still in the phase of public consultation.
What is the generic document required to provide to the Banco de Portugal, in case my company deals with cryptocurrency?
Here is a generic list of the documents required, more will be applicable
a) Draft articles of association or amendments to the articles of association, which contain an express reference to activities with virtual assets that the applicant proposes to provide;
b) Address of the professional domicile or head office and, when different, of the central administration, indicating the respective contacts;
c) Program of activities and business plan, indicating at least:
- The projected geographical implementation;
- The organizational structure and the human, technical and material resources allocated to the exercise of each activity with virtual assets, including a detailed description of the computer architecture associated with the development of such activities;
- A forecast of the total amount of operations associated with each of the activities with virtual assets, for the first three years of activity;
- The expected date for the start of activity;
d) Description of the internal control mechanisms to comply with legal or regulatory provisions aimed at preventing money laundering and terrorist financing, including an assessment of the risks associated with its projected base of customers, products and services, distribution channels to use, and predicted geographical areas of action, as well as measures to mitigate them;
e) Identity and respective supporting evidence of shareholders, beneficial owners and members of the management and supervisory bodies, and other persons in senior management positions;
f) Evidence of the suitability and competence of the persons subject to assessment;
g) Proof of holding the share capital and the origin of the funds used for its subscription; h) Other elements specified in sectoral regulations. Other documents and requests may apply to each case. This is a generic exemplificative list of documents. The members of the management and supervisory bodies and other persons who occupy top management functions in the entity to be registered to attach to the application for registration the declaration prepared and duly completed for those purposes. Banco de Portugal will reply to the registry application within 30 days of the submission, otherwise, the request will be considered as accepted. The annexes should be submitted in Portuguese and the other documents in either Portuguese or English, as long as they comply with:
How shall I submit all the documentation?
The submissions are to be made online by filling the forms provided on the Banco de Portugal site, the other documents must as well be submitted digitally, online.
Can the Banco de Portugal refuse the registration?
Yes, the Portuguese central bank can refuse or request more documents related to the registration, even cancel it. Banco de Portugal will refuse an application if:
- The application for registration is not accompanied by all the necessary elements and documents;
- It is clear that the fact to be registered is not stated in the documents submitted;
- The instruction of the application suffers from inaccuracies or falsehoods;
- Verify that none of the requirements on which access to activities with virtual assets depend;
- Check for the risk of serious non-compliance with laws and regulations designed to prevent money laundering and terrorist financing.
Can this registration be canceled?
Also, Banco de Portugal may also cancel previously granted applications:
- In the event of a serious or repeated violation of legal or regulatory provisions designed to prevent money laundering and terrorist financing.
- The registration has been obtained by means of false or inaccurate statements or other illegal means, regardless of the sanctions that may be applicable to the case;
- Lack of supervening requirements on which the granting of registration depends;
- The entity has ceased to exercise activities with virtual assets or has reduced or maintained them at an insignificant level for a period exceeding six months. The company or individual dealing with virtual assets may also, declare that he/it no longer wants to have activities linked with virtual assets, therefore forfeiting the registry. The registry also expires if the company/individual does not initiate activity within 6 months of the registry.
Although it might seem difficult to establish a company that deals with virtual assets / cryptocurrencies or digital tokens in Portugal, the requirements are all fairly straight forward, and this allied to the amazing ecosystem in Portugal, Portugal is one of the most attractive countries to initiate your activity. If you wish to know more about the taxation of cryptocurrency in Portugal and the EU you can also read our article about it, here.
This article is for informational purposes only and is not intended to be exhaustive in relation to the matters covered here. However, if you are still not completely clear and continue with doubts or if you want our help, do not hesitate to contact us through firstname.lastname@example.org.
Article written by Rodolfo José Santos and Miguel Poças Pereira