Crypto Licence in Portugal
In april Bison Bank was authorized to offer cryptocurrency storage and trading services in Portugal.Bison Bank, a Portuguese financial institution, obtained a license from the central bank of Portugal (Banco de Portugal) to operate as a virtual asset service provider (VASP), announced on Thursday Banco de Portugal.
According to Portuguese media outlet Sapo, Bison Bank will create a special business unit Bison Digital Assets to exchange virtual assets.The division is the first legal entity in Portugal owned by a bank authorized by Banco de Portugal to offer depository and cryptocurrency trading services.
Due to the rapid development of the Fintech industry, blockchain technology in general and cryptocurrency in particular are the subject of discussion by the Portuguese government.
Over the past few years, these technologies have attracted public attention mainly because of the rising cost of Bitcoins, the increased interest in holding ICOs in Portugal and other countries, and their market capitalization.
Those who intend to establish a crypto exchange in Portugal or a crypto company to carry out transactions with crypto assets, must be required to register with Banco de Portugal before starting their activities.
Obtaining authorization for crypto activities in Portugal is required for such virtual asset service providers as:
- providers providing exchange services between virtual assets and fiat currencies;
- providers of exchange services between one or more forms of virtual assets;
- service providers that allow the transfer of virtual assets from one address or wallet to another;
- custom wallet service providers (crypto exchanges and similar crypto companies).
The Central Bank is the competent authority for the registration of crypto companies in Portugal and the verification of compliance with applicable legal and regulatory provisions governing the implementation of AML by the above-mentioned persons.
The Banco de Portugal is the Portuguese competent authority responsible for registering entities intending to act as virtual assets service providers and verifying compliance with the legal and regulatory provisions governing the prevention of money laundering and terrorist financing (AML/CFT).
Banco de Portugal’s supervision regarding virtual assets service providers, as determined by Law No 83/2017 of 18 August 2017, is limited to AML/CFT purposes, and does not extend to other areas of prudential, market conduct or any other nature.
Activities with virtual assets subject to registration with the Banco de Portugal and regulated in Portuguese territory
When carried out within Portuguese territory, the following activities or operations with virtual assets are subject to prior registration with the Banco de Portugal, including where the applicant exercises another profession or activity covered by Law No 83/2017 of 18 August 2017:
- exchange services between virtual assets and fiat currencies or between one or more forms of virtual assets;
- transfer services of virtual assets;
- safekeeping and/or administration of virtual assets or instruments that enable the control, ownership, storage or transfer of such assets, including private encrypted keys.
The following persons or entities are considered to operate within Portuguese territory:
- legal persons or entities treated as legal persons incorporated in Portugal for the pursuit of activities with virtual assets;
- natural or legal persons or entities treated as legal persons with domicile or establishment in Portugal engaged in activities with virtual assets;
- other natural or legal persons or entities treated as legal persons which, due to the pursuit of activities with virtual assets, are obliged to declare their activity to the Portuguese tax authorities.
In order to obtain a crypto-sharing license in Portugal, a number of requirements must be fulfilled, which includes the following:
- Request from IBCM for prior permission to license the company in the Free Economic Zone of Portugal;
- The registration procedure of a Portuguese company;
- Obtaining an IBCM license;
- Application for a license to exchange cryptocurrencies with the Bank of Portugal;
- Appointment of an AML officer and local director;
- Opening of a settlement account with a Portuguese bank;
In Portugal, there are no border restrictions or obligations to declare assets in cryptocurrency. There is no separate obligation to report, in the case of payments in cryptocurrency above a certain threshold, with the exception of transactions in which an obligated person subject to the Portuguese AML Act may participate, In such a case, the person would have to report suspicious transactions or activities regardless of the amount involved.
Financial entities are obliged to evaluate fund transfers from and to virtual asset trading platforms in the light of ML/TF prevention rules. These require that financial entities fulfill a set of duties, including, for example:
- Identifying and knowing their customers;
- Keeping documents referring to customers and transactions;
- Examining and reporting suspicious transactions;
- Adopting and implementing internal control mechanisms suited to the ML/TF risk intrinsic to each entity.
- Apostilled/Legalized copies of passports of all participants;
- Apostilled/Legalized power of attorney for the registration of the company from all participants;
- Apostilled/Legalized certificate of legality at the place of citizenship of all participants;
- Power of attorney from the Company’s Directors to hire employees and apply for a license;
- Summary from all participants of the enterprise;
- Physical presence in Portugal (office);
- Local government (at least one of the directors must be resident in Portugal);
- Local AML officer.
In addition to documents for registration, 3 company names must be provided – in Portugal, repeated company names are prohibited, several names are required to select a possible option.
To register a company, it is also necessary to determine the types of economic activities that the company plans to carry out.
It is also necessary to determine the size of the minimum authorized capital. Despite the fact that the law established a limit – 1 euro.
The procedure for establishing creating a crypto company:
- Identification of future activities and developing a business plan.
- Selection, verification, and reservation of a commercial name for a crypto company.
- Collection of information about the beneficiaries, founders, and managers of the company.
- Finding a registration address for a crypto company.
- Preparation of constituent and registration documents.
- Formation and submission of a package of necessary documents for registration.
- State registration, if approved.
- Registration for tax and employment purposes.
- Obtaining additional licenses for regulated activities.
After the registration of the company, in addition to previously collected documents, the opening of an account with the Portuguese bank requires separately:
- Agreement on the establishment of the company;
- Extract from the State Register of Companies;
- Extract from the register of beneficiaries;
- Names of parents of the account manager;
- Mobile phone number;
- E-mail address.
Companies that carry out crypto operations, among other things, carry out the following actions:
- identify customers, as well as their representatives in cases provided for by law, requesting at least an identity document (for an individual) or registration documents (for a legal entity);
- take all reasonable steps to develop an understanding of the customer’s ownership and control structure;
- receive information about the purpose and intended nature of the business relationship;
- form a customer’s risk profile depending on the characteristics of transactions, the source and purpose of funds within the framework of the business relationship or a one-time transaction;
- collect, store and keep up-to-date information about customers and transactions with crypto assets;
- apply simplified or strict control procedures under certain conditions;
- refuse to conduct a transaction when there is a risk of money laundering and terrorist financing;
- submit reports in a general way, as well as on cases related to money laundering obtained by criminal means and financing of terrorism;
- educate employees responsible for compliance with the rules on combating money-laundering and the financing of terrorism.
According to the Bank of Portugal, there are several types of risks connected to the cryptolicense business in Portugal.
Transactions in virtual assets have associated risks for their users as well as for all market participants. In line with the warnings by the European supervisory authorities and the National Council of Financial Supervisors, the Banco de Portugal draws your attention to the following risks:
- Virtual assets are not legal tender in Portugal, meaning that it is not compulsory to accept them at face value;
- There is no legal protection of any kind guaranteeing the rights of redemption for consumers using virtual assets to make payments, unlike regulated payment instruments;
- In the event of virtual assets depreciating in whole or in part, there is no fund to cover any losses borne by their users, who will have to take on all the risks associated with transactions using these instruments;
- Virtual asset users may lose their money on the trading platform;
- Transactions in virtual assets may be used unlawfully, in criminal activity, including for ML/TF.
More general information
Cryptocurrency in Portugal is used to pay for services or goods that sellers accept this type of payment. This is especially advantageous for real estate sellers in Portugal.
Portugal is also attractive for obtaining a residence permit for foreigners, as this requires an investment in real estate of about 500 thousand euros.
By abandoning the income tax that was levied on individuals receiving income from the sale of cryptocurrency, the country’s leadership created more favorable conditions for the development of this business. Thus crypto traders can conduct financial activities without paying fiscal fees.
During the sale of goods or services, Portuguese tax law provides for a VAT rate of up to 23 per cent in some cases. However, the authorities have exempted crypto payments from the need to pay value added tax.
It is common practice in Portugal to pay for property in cryptocurrency. Thus, the first sale of real estate in Portugal for Bitcoin was made in 2018. The property that was sold during the transaction is located near Lisbon. This case was the first and gave a start for other real estate sellers, so today such transactions are drawn up regularly, and as payment cryptocurrency is used.
More about taxation of crypto business in Portugal.
At the moment, the main services of our company are legal and compliance solutions for FinTech projects. Our offices are located in Tallinn, Vilnius, and Warsaw. The legal team can assist with legal analysis, project structuring, and legal regulation.