The activity of issuing and trading virtual currencies is not regulated or supervised by Banco de Portugal or by any other financial system authority, either domestic or European, including the European Central Bank.
The lack of regulation of virtual currency transactions does not mean that these activities are illegal or prohibited. But the entities that issue and trade virtual currencies are not required to have authorisation from or be registered with Banco de Portugal, and as a result their activity is not subject to any type of prudential or conduct supervision.
In line with the alerts issued by the European Central Bank and the European Banking Authority since 2013, Banco de Portugal highlights the following:
- Virtual currencies 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 rights of redemption for a consumer using virtual currencies to make payments, unlike regulated payment instruments;
- Where virtual currencies depreciate partially or totally, there is no fund to cover any losses borne by their users, who have to take on all the risk associated with transactions using these instruments;
- The virtual currency users may lose their money on the trading platform;
- Virtual currency transactions may be used unlawfully, in criminal activity, including for money laundering and for terrorist financing.
Due to the risks associated with virtual currency usage, Banco de Portugal recommends that credit institutions, payment institutions and electronic money institutions subject to its supervision abstain from buying, holding or selling virtual currencies, as set out by Circular Letter of Banco de Portugal No 11/2015/DPG. This recommendation was issued following a request by the European Banking Authority to the national supervisory authorities.
Financial institutions are obliged to evaluate funds transfers from and to virtual currency trading platforms in the light of the rules to prevent money laundering and terrorist financing. These standards require that financial institutions fulfil a set of duties, including:
- Identification and know your customer;
- Keeping of documents referring to customers and transactions;
- Suspicious transaction examination and reporting;
- Adoption and application of internal control systems suitable for the money laundering and terrorist financing risk inherent to each institution.