Virtual assets have no legal tender in Portugal
Banco de Portugal (BdP), through a statement published today on its website, which is transcribed in full below, alerted consumers to the risks associated with cryptocurrencies, such as Bitcoin, warning that they are normally subject to a "huge volatility and are not guaranteeds by any national or European authority. "
In view of the recent volatility observed in the prices of certain virtual assets, namely Bitcoin, Banco de Portugal reiterates the warnings previously addressed to consumers regarding the risks associated with the use and marketing of these assets. In particular, Banco de Portugal draws attention to the following risks:
– Virtual assets do not have a legal tender in Portugal, so their acceptance at face value is not mandatory;
– Virtual assets are not guaranteed by Banco de Portugal or by any national or European authority;
– Currently, there is no legal protection that guarantees reimbursement rights for consumers who use virtual assets to make payments, unlike what happens with regulated payment instruments;
– The information on virtual assets made available to consumers may be inaccurate, incomplete or unclear, and the pricing of these assets is often not very transparent;
– Most virtual assets are subject to enormous volatility. In the event of partial or total devaluation of virtual assets, there is no fund to cover possible losses for its users, who will have to bear the entire risk associated with operations with these instruments. As such, the user of virtual assets may lose much or all of the invested capital;
– Transactions with virtual assets can be misused in criminal activities, including money laundering and terrorist financing;
– Most of the entities that sell virtual assets are not based in Portugal, so any dispute resolution may fall outside the competence of the national authorities.
Banco de Portugal has been, since 1 September 2020, the authority with competences both in registration and in verifying compliance with the legal and regulatory provisions applicable to money laundering and terrorist financing, by entities that exercise any of the following activities with virtual assets: exchange services between virtual assets and fiat currencies or between one or more virtual assets; virtual asset transfer services; and custody or custody services and administration of virtual assets or instruments that allow to control, hold, store or transfer these assets, including private cryptographic keys.
However, it is clarified that in relation to such entities, the competence of Banco de Portugal is limited only to the prevention of money laundering and the financing of terrorism, not extending to other domains, of a prudential, behavioral or other nature.
The present alert to consumers about the risks associated with the use of virtual currencies complements the previous alerts made by Banco de Portugal and which can be found here.