Portugal’s banking sector shies away from cryptoasset services over lack of regulations

A lack of a homegrown legal regulatory framework in Portugal governing cryptoassets in line with European Regulations on the Crypto Assets Market (MiCA) is not only deterring new companies in Portugal specialising in crypto assets from setting up in the country, but is also spooking its banking sector from embracing the sector.

Yet in neighbouring Spain, financial institutions have already opened the door to the custody and execution of digital cryptoasset transactions while in Portugal the banks are shying away from getting more involved in such transactions.

According to the business daily Negócios, a source at the Portuguese public bank Caixa Geral de Depósitos revealed that the bank had “no plans to launch these kinds of services in the immediate future”, pointing to two main obstacles: “a lack of regulation making the rules of the game clear”, and the absence of a regulatory framework “clearly defining the roles and responsibilities of operators in the market”.

In other words Portugal, unlike Spain, simply doesn’t have a legal and regulatory framework to supervise, control and hold the actors in the market responsible for transactions and address problems, or hold players to account when things go wrong.

CGD also points out that the level of financial literacy in Portugal on cryptoassets needs to be improved so that clients are fully aware of the risks and benefits of cryptoassets before investing in them or availing themselves of such services.

Another bank in Portugal, BPI, which is held by Spanish bank CaixaBank, also has no plans on the horizon to offer crypto trading services but says it could review its position if Portugal creates a robust regulatory framework.

BCP bank also confirmed that it did not offer such services and had no plans to do so in the foreseeable future without going into the reasons why.

Portugal’s crypto asset regulations are primarily focused on preventing money laundering and terrorist financing (ML/TF), rather than a comprehensive regulatory framework for the entire crypto ecosystem. While the Bank of Portugal registers entities operating with virtual assets and oversees their ML/TF compliance, this supervision is limited and doesn’t extend to prudential, banking conduct, or other domains.