Crypto License in Portugal 2024

Portugal has emerged as a leader in fostering innovation within the European Union, particularly in the realm of financial technology and cryptocurrency. With a reputation for being a business-friendly environment, Portugal has developed a robust regulatory framework that balances innovation with security. The Bank of Portugal (Banco de Portugal) and the Portuguese Securities Market Commission (CMVM) are the primary regulatory bodies overseeing the cryptocurrency sector, ensuring that businesses operate within a well-defined legal structure.

Portugal’s regulatory approach is designed to encourage the growth of the cryptocurrency industry while implementing rigorous standards to protect against financial crimes, including money laundering and fraud. As a result, Portugal has become an attractive destination for companies looking to operate within the cryptocurrency space.

This page provides detailed guidance on how to obtain a cryptocurrency license in Portugal, such as the Virtual Asset Service Provider (VASP) license. It outlines the necessary steps, compliance requirements, and the support available to help you navigate the licensing process efficiently and successfully

Regulations for Crypto license in Portugal

Portugal has established a progressive and supportive regulatory environment for cryptocurrency and digital asset businesses. The country is increasingly recognized for its favorable legal framework, which encourages innovation while ensuring compliance with international standards. The Bank of Portugal (Banco de Portugal) and the Portuguese Securities Market Commission (CMVM) play key roles in overseeing and enforcing regulations related to cryptocurrency operations within the country.

Portugal’s regulatory approach is designed to promote transparency, security, and investor protection within the cryptocurrency market. This includes stringent anti-money laundering (AML) and counter-terrorist financing (CFT) regulations, as well as measures to protect consumer rights and maintain the integrity of financial markets.

On this page, you will find detailed information about the key regulatory aspects involved in obtaining a crypto license in Portugal. Below are the main areas of focus that businesses must address to ensure compliance:

1. Registration and Licensing

All businesses engaged in cryptocurrency activities, such as exchanges and wallet providers, are required to register with the Bank of Portugal (Banco de Portugal).
The specific license needed depends on the type of services your business provides. Currently, a VASP (Virtual Asset Service Provider) license in Portugal is required for companies offering services related to cryptocurrency exchanges, custodial services, or wallet solution.
With the upcoming full implementation of the MiCA (Markets in Crypto-Assets) regulation across the European Union, it is anticipated that CASP (Crypto Asset Service Provider) licenses will replace VASP licenses. The CASP license in Portugal will include the same fundamental requirements as the VASP license, along with additional obligations as stipulated by MiCA.

2. Anti-Money Laundering (AML) and Know Your Customer (KYC)

in Portugal, all cryptocurrency-related businesses must adhere to stringent Anti-Money Laundering (AML) regulations, as mandated by Law No. 83/2017, which was enacted to prevent money laundering and terrorist financing. These regulations require businesses to implement comprehensive AML policies, including the identification, monitoring, and reporting of suspicious transactions. Companies must maintain detailed records of transactions and report any large or suspicious activities to the relevant Portuguese authorities.
Companies are required to establish robust Know Your Customer (KYC) procedures to verify the identities of their clients. This includes collecting and verifying client information such as personal identification, conducting background checks, and continuously monitoring customer activity to ensure compliance with regulatory standards
Companies are obligated to report certain transactions and suspicious activities to the Unidade de Informação Financeira (UIF), the national financial intelligence unit

3. Financial Reporting and Auditing

Licensed crypto businesses are subject to regular financial audits conducted by independent auditors. These audits ensure transparency, accuracy, and adherence to both local and EU financial regulations.
Companies are mandated to submit periodic reports on their financial activities, including transaction volumes and compliance with regulatory standards, to the appropriate authorities. These reports are essential for maintaining the integrity and trust in the financial system.

4. Consumer Protection

Companies offering cryptocurrency services in Portugal are required to maintain high levels of transparency. This involves providing clear and comprehensive information to customers about the nature of the services, fees, associated risks, and the terms and conditions related to cryptocurrency transactions.
In Portugal, businesses must implement robust measures to safeguard customer funds. This includes the use of secure and insured custodial services to protect customer assets from potential fraud, theft, or loss. Companies are also expected to comply with national and EU-wide regulations aimed at ensuring the security and integrity of customer assets in the cryptocurrency market.

5. Cybersecurity Standards

Companies must adopt stringent cybersecurity protocols to protect sensitive data from unauthorized access, cyberattacks, and data breaches. This includes implementing encryption, multi-factor authentication, regular security audits, and ensuring secure data storage and transmission.
In the event of a security breach or cyber incident, companies are required to immediately report the occurrence to the relevant Portuguese authorities. Prompt action must be taken to contain and mitigate the impact of the breach.

6. Operational Requirements

While there is no stringent prescribed capital requirement for VASP registration in Portugal, a minimum contribution of around EUR 1,000 is typically expected during the incorporation of a legal entity.
Companies must establish strong internal controls and governance frameworks to ensure compliance with regulatory standards and to manage operational risks effectively.

7. International Cooperation

Businesses that operate internationally must comply with both Portuguese regulations and the regulations of other jurisdictions where they operate. This may involve cooperation with foreign regulatory bodies and adherence to international standards set by organizations such as the Financial Action Task Force (FATF). Portuguese authorities, including the Bank of Portugal and the CMVM (Comissão do Mercado de Valores Mobiliários), work in tandem with international organizations to ensure compliance with global standards and to facilitate cross-border operations in the digital asset sector.

8. Innovation and Adaptability

In Portugal, businesses involved in innovative financial technologies, including cryptocurrency operations, can benefit from a regulatory sandbox. This framework allows companies to test new services and products under controlled conditions, with regulatory oversight ensuring compliance and safety.
The Portuguese regulatory landscape is designed with flexibility in mind, adapting to the rapid advancements in technology and the evolving demands of the cryptocurrency market. This ensures that regulations remain relevant and supportive of innovation while safeguarding market integrity.

Types of VASP licensing in Portugal

Currently, cryptocurrency businesses in Portugal must obtain a Virtual Asset Service Provider (VASP) License to operate within the digital asset space. This license is crucial for entities providing services such as exchanges, transfers, and custodial activities related to virtual assets. The VASP framework, overseen by the Bank of Portugal (Banco de Portugal), ensures that all activities meet rigorous standards for security, transparency, and consumer protection, reflecting the country’s commitment to maintaining a stable and trustworthy cryptocurrency market.

CASP license in Portugal

As the European Union progresses with the implementation of the MiCA (Markets in Crypto-Assets) regulation, a shift towards the Crypto Asset Service Provider (CASP) License in Portugal is expected. Although the CASP license in Portugal will introduce some additional requirements, it will largely build on the established VASP framework, ensuring a smooth transition for businesses currently licensed under the VASP regime.

Portuguese CASP license criteria

The MiCA regulations in Portugal, expected to be fully implemented by December 2024, will introduce stricter capital requirements, ranging from 50,000 to 150,000 euros, depending on the nature of services offered. Businesses should also prepare for additional documentation during the application process to comply with these new standards. Hereunder are described services with expected required share capital divided by three classes:

	Description of services	Share Capital
Class 1	crypto processing or transmitting services provision of advice in crypto assets crypto asset portfolio management services	50,000 EUR
Class 2	Crypto exchange services to fiat or other cryptocurrency Crypto custody services	125,000 EUR
Class 3	Crypto Trading Platform	150,000 EUR

Overview of requirements to obtain Crypto license in Portugal

The business must be legally incorporated in Portugal, complying with all national regulations.
The company must register as a Virtual Asset Service Provider (VASP) with the Bank of Portugal.
Appointment of a local Compliance Officer with experience in Portuguese financial regulations is required.
The company must meet the minimum capital requirements as outlined under Portuguese law, which can vary depending on the services provided under the VASP license.
Full compliance with Law No. 83/2017, which governs AML and KYC procedures, is mandatory. This includes regular reporting to the relevant authorities, such as the Unidade de Informação Financeira (UIF).

Estimated time frames

Gathering documents

1-2 weeks

Company formation

1-2 weeks

Pre-application process and analyses

2-4 weeks

Crypto license obtainment from Bank of Portugal

3-5 months

*The timeline may vary based on the completeness of the documentation and the responsiveness of the regulatory bodies. These figures are aligned with general expectations for regulatory processes within the EU, particularly under MiCA and Portuguese regulations.

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Detailed Requirements for Crypto licensing in Portugal

Obtaining a crypto license in Portugal involves a thorough and multi-faceted process to ensure adherence to local and international regulatory standards. This process is designed to safeguard the financial system’s integrity while facilitating the operation of cryptocurrency businesses within the country. Below is a detailed overview of the key requirements for obtaining a crypto license in Portugal:

List of required documents

According to Law No. 83/2017, businesses must establish a comprehensive AML , KYC , and CFT policy. This should include:
- Anti-Money Laundering (AML): Implement robust AML measures, including customer due diligence, transaction monitoring, and reporting to the relevant authorities like Unidade de Informação Financeira (UIF).
- Know Your Customer (KYC): Establish strict procedures for customer identification, including collecting personal data (e.g., names, addresses, dates of birth) and verifying identification documents.
- Countering the Financing of Terrorism (CFT): Implement strategies to prevent the use of digital assets for terrorist financing, with a focus on risk assessment and monitoring for unusual transactions.
Application Form:

Detailed application outlining the business model, primary and secondary activities, the types of services offered (e.g., trading, exchange, custody), and targeted geographical markets.
Memorandum and Articles of Association (MAA)
- Legal document that includes the company’s structure, governance, registered office, share capital, and internal regulations. This document must be submitted to the Registo Comercial (Commercial Registry) to maintain transparency and accountability.
Registo Comercial (Commercial Registry)
Companies must register with the Portuguese Commercial Registry, submitting corporate documents like the Articles of Incorporation, minutes of shareholders’ meetings, and resolutions passed by the board of directors. This registration is necessary for the legal recognition of the company in Portugal.

Share Capital and Government Fees

Minimum Share Capital: There is no strict minimum share capital requirement in Portugal, but typically a minimum contribution of EUR 1,000 is recommended for company incorporation. This ensures the company has sufficient initial funds to demonstrate its business intentions.
Government Fees: The state fee for obtaining a crypto license from the Bank of Portugal is EUR 475. Additionally, online company registration incurs a state duty of EUR 360, which is paid to the Registry of Company during the verification process.

Personnel Requirements

Appoint a certified and qualified Compliance Officer with relevant experience in the financial or blockchain sector. This individual is responsible for ensuring the company complies with all regulatory requirements and implements AML / CFT policies.
Although it is not compulsory to appoint a local director in Portugal, doing so can be advantageous, particularly if there is a need to establish a local bank account. The director should possess relevant expertise and qualifications in the financial or blockchain industries to ensure proper governance and effective management of the company.

Business premises requirements

The Bank of Portugal mandates that companies holding a VASP license maintain a registered address within Portugal. This address serves as the business’s official site for all legal and regulatory correspondence.
While a physical office is advisable for operational effectiveness, companies can also opt for virtual offices or co-working spaces, provided they meet the necessary regulatory standards. We can assist in setting up these options to ensure full compliance with Portuguese regulations.

Roadmap of obtaining Crypto license in Portugal

To successfully obtain a Crypto License in Portugal, businesses must navigate a structured process that adheres to both national and EU regulatory frameworks. This procedure ensures that cryptocurrency operations are conducted within a legally compliant and secure environment, following the stringent standards set by Portuguese authorities, such as the Bank of Portugal and the Portuguese Securities Market Commission (CMVM).

For more detailed guidance and support throughout this process, our legal experts are available to assist at every stage.

Eriks Fijalovs

Head of Blockchain and Crypto

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Email: info@legalaes.com

Phone: +372 602 8525

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Defining Crypto Activities

Determine the specific type of crypto services the business will offer (e.g., exchange, custody, trading).

Document Collection and Preparation

-Gather necessary documents, including proof of identity for shareholders and directors, business plans, and compliance documents.

-Verify the availability of the chosen company name.

-Draft and prepare the Articles of Association.

Company Registration

-Officially register the company in Portugal with the appropriate authorities.
-Complete registration with the Portuguese Commercial Registry.
-Obtain the necessary tax identification numbers.

Opening a Corporate Bank Account

-Set up a corporate bank account in a Portuguese bank.
-Provide required documentation, including business registration and proof of compliance with regulatory standards.

Application Submission to the Bank of Portugal

-Submit the application for the crypto license to the Bank of Portugal, including all required documentation and fees.
-Ensure the application meets all regulatory requirements, particularly regarding AML/KYC procedures.

License Review and Confirmation

-The Bank of Portugal reviews the submitted application.
-Address any additional requests from the regulator during the review process

-Upon approval, receive the official crypto license.

Operational launch

-Launch operations in compliance with all legal and regulatory requirements.
-Implement ongoing compliance monitoring and updates to adhere to the latest regulations.

Detailed Time Frames to Obtain a Crypto License in Portugal

To estimate the time frame for obtaining a crypto license in Portugal, several factors come into play, including the thoroughness of the application, the type of business, and the responsiveness of the regulatory authorities. Below is an estimated timeline for completing the crypto licensing process in Portugal:

1. Initial Preparation and Documentation

Time Frame: 1-2 weeks

Develop comprehensive AML and KYC policies in line with Portuguese regulations.
Set up internal control systems to ensure compliance.
Collect and prepare all necessary documents, such as identification of directors and business plans.

2. Application Submission

Time Frame: 1-3 days

Submit the complete application package to the Bank of Portugal and relevant authorities, ensuring all required documents are included.

3. Regulatory Review and Assessment

Time Frame: 3-5 months

Portuguese authorities, including the Bank of Portugal, will thoroughly review your application and supporting documents to ensure compliance with national and EU standards.
Authorities may request additional information or clarifications if needed.

4. Final Registration and License Issuance

Time Frame: 1-2 weeks

After a successful review, the regulatory bodies will approve your registration, finalizing your status as a licensed Virtual Asset Service Provider (VASP) in Portugal.

Overall Estimated Time Frame – Approximately 5-7 months

Factors Influencing the Time Frame

Providing a complete, detailed application for a VASP license can speed up the review process.
Response times from Portuguese authorities can vary, affecting the timeline.
Businesses with more intricate VASP operations may require additional time for review
Quickly responding to any requests for further information from the Bank of Portugal can help expedite the process.

Securing a VASP crypto license in Portugal is a multi-step process involving thorough documentation and regulatory review. The total time frame can range from 3 to 6 months, influenced by the factors mentioned above. By ensuring proper preparation and compliance, and by engaging professional services like those offered by Legalaes, businesses can streamline the licensing process and avoid unnecessary delays.

Advantages of the VASP license in Portugal

Stable Regulatory Environment

Portugal offers a clear and transparent regulatory framework, fostering trust and ensuring legal compliance for cryptocurrency businesses.

Favorable Tax Regime

Portugal, especially regions like Madeira, offers competitive tax rates, including a low corporate tax and zero tax on dividends for crypto activities.

Business-Friendly Environment

As part of the EU, Portugal provides businesses with access to the European financial market, ensuring broader operational reach.

No Minimum Capital Requirements

Unlike many jurisdictions, Portugal does not require a minimum initial capital for establishing a crypto business.

Supportive Business Ecosystem

Portugal’s government supports fintech and blockchain innovation, making it a conducive environment for crypto enterprises.

Operational Flexibility

The regulatory environment in Portugal allows for the use of virtual offices, making it easier for businesses to manage operations without needing a physical office.

Strong Consumer Protection

Portugal’s regulations ensure robust consumer protection through stringent AML and KYC requirements, which enhance trust in the crypto market.

Advanced Infrastructure

Portugal boasts advanced technological infrastructure and a skilled workforce, which are critical for the development and operation of cryptocurrency businesses.

Links for legislation related to Crypto business in Portugal

I. Banco de Portugal

The primary regulatory body overseeing financial institutions, including VASPs. It provides guidance on the legal framework for cryptocurrencies.

II. Portuguese Securities Market Commission (CMVM)

This commission regulates securities and ensures compliance with financial market standards, relevant to companies dealing with digital assets.

III. Unit for Financial Information (UIF)

This unit operates under the Judiciary Police and focuses on preventing money laundering and terrorist financing, critical for VASP operations.

IV. Tax Authority – Autoridade Tributária e Aduaneira (AT)

Portugal’s tax authority provides information on tax obligations for cryptocurrency businesses, including VAT and income tax.

V. MiFID II

European regulatory framework for financial markets that also impacts crypto asset trading.

VI. European Parliament and Council Directive 2009/110/EC

Related to the issuance of electronic money, which can be relevant for certain crypto services.

VII. Law No. 83/2017 (Anti-Money Laundering Law)

Sets the legal framework for anti-money laundering and counter-terrorist financing measures in Portugal.

VIII. Directive (EU) 2018/843 (5th AMLD)

An EU directive on the prevention of the use of the financial system for money laundering or terrorist financing.

IX. European MiCa Regulation

Regulation establishes a harmonized framework across the EU for regulating cryptocurrencies and digital assets. It aims to protect consumers, ensure financial stability, and foster innovation by setting clear guidelines for the issuance, trading, and management of crypto-assets.

Taxation of Cryptocurrency Companies in Portugal

Taxation of cryptocurrency companies in Portugal is a crucial aspect of regulatory compliance, reflecting the government’s commitment to integrating digital assets into the broader financial system while ensuring adherence to tax laws. Below are the key elements of how crypto companies are taxed in Portugal:

1. Corporate Tax (Imposto sobre o Rendimento das Pessoas Colectivas – IRC)

1. Corporate Tax

Cryptocurrency companies are subject to a corporate tax rate of 21% on their profits. However, companies operating in the Madeira Free Trade Zone may benefit from reduced rates, potentially as low as 5%, under specific conditions.

2. Dividend and Withholding Tax

Dividends distributed by cryptocurrency companies to shareholders may be subject to a withholding tax rate of 25%. This rate can vary depending on tax treaties and the status of the recipient.

3. Value Added Tax (VAT)

Cryptocurrency transactions are generally VAT-exempt in Portugal, following the ruling by the European Court of Justice, which applies across the European Union, including Portugal.

4. Capital Gains Tax

For individuals, capital gains from the sale of cryptocurrencies can be exempt from tax if not related to professional or business activities. For companies, gains from cryptocurrency transactions are subject to corporate tax.

5. International Transactions

Cross-border transactions must comply with transfer pricing rules, ensuring that profits are taxed appropriately. Portugal follows the OECD guidelines on this matter, and tax treaties help avoid double taxation.

6. Tax Reporting and Compliance

Portuguese cryptocurrency companies must adhere to strict reporting requirements, including regular tax filings and compliance with AML regulations. This is a critical area of compliance for businesses in Portugal.

7. Personal Income Tax

Income derived from cryptocurrency trading, if conducted as a business, is taxed under personal income tax rates, which can reach up to 48% depending on the total income of the individual.

8. Regulatory Guidance and Updates

The Portuguese tax authorities and the Bank of Portugal regularly update their guidelines to ensure that taxation of cryptocurrencies aligns with international standards and best practices.

FAQ about Crypto license in Portugal

1. What is a Virtual Asset Service Provider (VASP) license in Portugal, and why do I need one?

A VASP license is required for businesses dealing with virtual assets like cryptocurrencies. It allows companies to legally operate in Portugal, ensuring compliance with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations.

2. What are the basic requirements to obtain a VASP license in Portugal?

Companies must be legally incorporated in Portugal, have a physical or virtual office, appoint a local Compliance Officer, and meet specific capital requirements. Full compliance with Portuguese AML/KYC laws is also mandatory.

3. How long does it take to obtain a VASP license in Portugal?

The process typically takes between 3 to 6 months, depending on the completeness of the application and responsiveness of the regulatory authorities.

4. Are there any tax benefits for crypto companies in Portugal?

Yes, Portugal offers favorable tax conditions, including exemptions from VAT on cryptocurrency transactions and potentially reduced corporate tax rates in the Madeira Free Trade Zone.

5. What is the process for applying for a crypto license in Portugal?

The process involves gathering documentation, registering the company, preparing and submitting the license application, and awaiting approval from the Bank of Portugal.

6. What is the difference between a VASP and CASP license in Portugal, and when will the CASP be implemented?

The CASP (Crypto Asset Service Provider) license is expected to replace the VASP license as Portugal aligns with the EU's Markets in Crypto-Assets (MiCA) regulation. The CASP license will introduce stricter requirements, including higher capital reserves and enhanced compliance measures. The transition from VASP to CASP is anticipated by December 2024, and businesses should prepare for the upcoming changes to ensure compliance.

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