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Virtual assets

Since 1 September 2020, the Banco de Portugal has been the competent authority in registering and verifying compliance with the applicable legal and regulatory provisions governing the prevention of money laundering and terrorist financing (ML/TF), by the entities that carry out any of the following activities involving virtual assets:

  • Exchange services between virtual assets and fiat money or between one or more virtual assets;
  • Virtual asset transfer services;
  • Services of safekeeping, or safekeeping and administration of virtual assets or of instruments that enable the control, ownership, storage or transfer of such assets, including private encrypted keys.

However, it should be clarified that the responsibility of the Banco de Portugal is limited to ML/TF prevention, not covering other domains of a prudential, banking conduct or any other nature.

Thus, and in line with the alerts that have been issued by the European Central Bank and the European Banking Authority since 2013, the Banco de Portugal draws attention to the following: 

  • 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 a consumer 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 with virtual assets may be used unlawfully, in criminal activity, including for ML/TF.

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 fulfil 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.