Portugal

Retail_Trading_Status

Allowed-Regulated High Confidence

Analysis ID: #762
Version: Latest
Created: 2025-12-12 05:08
Run: 9e565b0b...
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Workflow Stage: Step 1

Executive Summary

Cryptocurrency trading is fully legal and regulated in Portugal, with a dual supervisory framework involving the Banco de Portugal (BdP) and the Portuguese Securities Market Commission (CMVM). A mandatory registration regime for Virtual Asset Service Providers (VASPs) has been in force since 2021 for AML/CFT compliance, which is currently transitioning into a full licensing regime under the EU's Markets in Crypto-Assets (MiCA) regulation as of late 2025. Retail investors can freely trade digital assets, subject to a specific tax regime introduced in 2023 that exempts capital gains on assets held for more than one year while taxing short-term gains at 28%.

Detailed Explanation

Cryptocurrency trading is fully legal and regulated in Portugal, operating under a clear and evolving dual supervisory framework. The regulatory landscape is defined by a mandatory registration regime for Virtual Asset Service Providers (VASPs) established under the amended Law No. 83/2017, which brought VASPs under the country's anti-money laundering and counter-terrorist financing (AML/CFT) rules. This framework is enforced by the Banco de Portugal (BdP), which manages the VASP registry as detailed in its Notice No. 3/2021 from April 23, 2021. Concurrently, the Portuguese Securities Market Commission (CMVM) supervises market conduct and crypto-assets that qualify as financial instruments. This regime is currently transitioning to a comprehensive licensing system under the European Union's Markets in Crypto-Assets (MiCA) regulation, with national implementation via the MiCA Implementation Law (Draft Law 32/XVII/1) enacted on December 5, 2025, designating BdP and CMVM as the competent authorities. The transition period for existing VASPs to obtain full Crypto-Asset Service Provider (CASP) licenses is set to conclude in July 2026, with a grandfathering clause protecting entities registered before December 30, 2024. For retail investors, Portugal offers a specific and attractive tax regime introduced by the State Budget Law for 2023 (Law No. 24-D/2022) enacted on December 30, 2022. This law exempts capital gains on crypto assets held for more than 365 days from personal income tax, while taxing short-term gains at a flat rate of 28%. All taxpayers are required to declare their crypto holdings in their annual IRS tax return. Key compliance obligations for service providers include strict adherence to AML/CFT procedures, such as Know Your Customer (KYC) and Customer Due Diligence (CDD), and the implementation of the Travel Rule for crypto transfers, which mandates the collection and sharing of originator and beneficiary information. Portugal has thus moved from a perception as a crypto tax haven to a transparent, regulated jurisdiction that maintains competitive incentives for long-term investment, solidifying its 'Allowed-Regulated' status through active enforcement and legislative modernization.

Summary Points

Portugal: Cryptocurrency Regulatory Analysis

I. Regulatory Status
* Allowed-Regulated: Cryptocurrency trading is fully legal and operates under a regulated, dual-supervisory framework.
* A mandatory registration (transitioning to licensing) regime for Virtual Asset Service Providers (VASPs) is in force.
* Retail investors can freely trade digital assets under a specific tax regime.

II. Key Regulatory Bodies
* Banco de Portugal (BdP)
* Primary authority for VASP registration for AML/CFT purposes.
* Prudential supervisor for Crypto-Asset Service Providers (CASPs) under the MiCA framework.
* Comissão do Mercado de Valores Mobiliários (CMVM)
* Supervises market conduct and crypto-assets qualifying as financial instruments.
* Oversees crypto-asset white papers (for non-MiCA assets) and authorizes public offerings.

III. Important Legislation
* Law No. 83/2017 (amended by Law No. 58/2020)
* Enacted August 18, 2017. The primary AML/CFT law, amended to explicitly include VASPs as obligated entities, mandating their registration with the BdP.
* Notice of the Banco de Portugal No. 3/2021
* Enacted April 23, 2021. Registers the specific procedures and requirements for VASP registration in Portugal.
* State Budget Law for 2023 (Law No. 24-D/2022)
* Enacted December 30, 2022. Introduced the specific tax regime for crypto assets, establishing a 28% tax on short-term gains and an exemption for holdings over 365 days.
* MiCA Implementation Law (Draft Law 32/XVII/1)
* Enacted December 5, 2025. National legislation transposing the EU's Markets in Crypto-Assets (MiCA) regulation, designating BdP and CMVM as competent authorities and setting a transition period ending July 2026.

IV. Compliance Requirements
* Mandatory VASP Registration/Licensing: Entities providing exchange, transfer, or custody services must register with the BdP and are transitioning to obtain full CASP licenses under MiCA by July 2026.
* AML/CFT Compliance: Strict adherence to Law 83/2017 is required, including KYC, Customer Due Diligence (CDD), and suspicious transaction reporting.
* Travel Rule: VASPs must collect and share originator and beneficiary information for crypto transfers.
* Tax Reporting: Taxpayers must declare all crypto holdings and any taxable gains in their annual IRS tax return (Modelo 3), even for exempt long-term holdings.

V. Notable Restrictions or Limitations
* No specific restrictions on retail trading, but all activity must be conducted through registered/licensed service providers compliant with AML rules.
* The Travel Rule imposes strict data-sharing obligations that may limit interoperability with non-compliant platforms or jurisdictions.

VI. Recent Developments or Notes
* Tax Exemption: A key feature is the exemption from personal income tax for capital gains on crypto assets held for more than 365 days, making Portugal attractive for long-term investors.
* Transitional Regime: VASPs registered with the BdP before December 30, 2024, benefit from a grandfathering clause, allowing them to operate until the MiCA licensing deadline of July 2026.
* Dual Supervision: Market participants must navigate oversight from both the Central Bank (BdP) for prudential/AML matters and the Securities Commission (CMVM) for market conduct.
* Portugal has transitioned from a 'crypto tax haven' reputation to a regulated, transparent jurisdiction while maintaining competitive tax incentives.

Full Analysis Report

Portugal has solidified its status as a 'Allowed-Regulated' jurisdiction for cryptocurrency, evolving from a previously light-touch environment to a comprehensive regulatory framework aligned with European Union standards. The cornerstone of this framework is the mandatory registration regime with the Banco de Portugal (BdP), which has been in force since 2021. This regime requires all entities engaging in exchange services between virtual assets and fiat, crypto-to-crypto exchanges, transfer services, or custody to register for Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) purposes. As of late 2025, this regime is actively transitioning into a full licensing system under the EU's Markets in Crypto-Assets (MiCA) regulation, which Portugal has implemented via national legislation approved in December 2025.

The regulatory architecture is bifurcated between two primary authorities. The Banco de Portugal retains authority over the prudential supervision of Crypto-Asset Service Providers (CASPs) and AML/CFT compliance. Meanwhile, the Portuguese Securities Market Commission (CMVM) is tasked with supervising market conduct, the issuance of crypto-assets (excluding asset-referenced tokens and e-money tokens which fall under BdP), and ensuring consumer protection. This dual-pillar approach ensures that while financial stability and illicit finance risks are managed by the central bank, investor protection and market integrity are overseen by the securities regulator.

From a taxation perspective, Portugal remains one of the most distinct jurisdictions in Europe. The State Budget for 2023 introduced a specific tax code for crypto assets, clarifying a previously gray area. Under current rules, capital gains derived from crypto assets held for less than one year are taxed at a flat rate of 28%. Crucially, gains on assets held for more than 365 days are exempt from taxation for individuals, provided the activity does not constitute a professional or commercial activity. This 'holding period' exemption continues to drive retail interest and investment, although reporting obligations have been tightened, requiring disclosure of holdings in annual tax filings regardless of tax liability.

The operational environment for retail trading is open and integrated with the traditional financial system. Portuguese banks generally process transfers to and from registered crypto exchanges, although they apply strict due diligence in line with the new 'Travel Rule' requirements mandated by EU Regulation 2023/1113. The transition to MiCA is a critical current focus; entities that were registered with the BdP prior to December 30, 2024, have been granted a transitional period until July 1, 2026, to achieve full MiCA compliance. Those failing to register by the 2024 deadline are barred from operating until they secure a full license, effectively closing the door to unregulated gray-market operators.

Portugal has solidified its status as a 'Allowed-Regulated' jurisdiction for cryptocurrency, evolving from a previously light-touch environment to a comprehensive regulatory framework aligned with European Union standards. The cornerstone of this framework is the mandatory registration regime with the Banco de Portugal (BdP), which has been in force since 2021. This regime requires all entities engaging in exchange services between virtual assets and fiat, crypto-to-crypto exchanges, transfer services, or custody to register for Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) purposes. As of late 2025, this regime is actively transitioning into a full licensing system under the EU's Markets in Crypto-Assets (MiCA) regulation, which Portugal has implemented via national legislation approved in December 2025.

The regulatory architecture is bifurcated between two primary authorities. The Banco de Portugal retains authority over the prudential supervision of Crypto-Asset Service Providers (CASPs) and AML/CFT compliance. Meanwhile, the Portuguese Securities Market Commission (CMVM) is tasked with supervising market conduct, the issuance of crypto-assets (excluding asset-referenced tokens and e-money tokens which fall under BdP), and ensuring consumer protection. This dual-pillar approach ensures that while financial stability and illicit finance risks are managed by the central bank, investor protection and market integrity are overseen by the securities regulator.

From a taxation perspective, Portugal remains one of the most distinct jurisdictions in Europe. The State Budget for 2023 introduced a specific tax code for crypto assets, clarifying a previously gray area. Under current rules, capital gains derived from crypto assets held for less than one year are taxed at a flat rate of 28%. Crucially, gains on assets held for more than 365 days are exempt from taxation for individuals, provided the activity does not constitute a professional or commercial activity. This 'holding period' exemption continues to drive retail interest and investment, although reporting obligations have been tightened, requiring disclosure of holdings in annual tax filings regardless of tax liability.

The operational environment for retail trading is open and integrated with the traditional financial system. Portuguese banks generally process transfers to and from registered crypto exchanges, although they apply strict due diligence in line with the new 'Travel Rule' requirements mandated by EU Regulation 2023/1113. The transition to MiCA is a critical current focus; entities that were registered with the BdP prior to December 30, 2024, have been granted a transitional period until July 1, 2026, to achieve full MiCA compliance. Those failing to register by the 2024 deadline are barred from operating until they secure a full license, effectively closing the door to unregulated gray-market operators.

Source Evidence

Primary and secondary sources cited in this analysis

Registration of virtual assets service providers primary (regulator)

2025-12-05

"The Banco de Portugal is the Portuguese competent authority responsible for registering entities intending to act as virtual assets service providers."

Notice of the Banco de Portugal No. 3/2021 primary (regulator)

2021-04-23

"Regulates the registration process with the Banco de Portugal of entities that intend to carry out, within Portuguese territory, activities with virtual assets."

Press release on the application of MiCA Regulation primary (regulator)

2025-01-03

"Since 30 December 2024, the provision of crypto-asset services in the European Union has been made conditional on authorisation granted."

Portugal Brings Crypto Firms Under Bank-Style Supervision secondary (news)

2025-12-05

"Lawmakers have approved a sweeping framework that folds digital-asset companies into mainstream financial supervision... sets a firm 1 July 2026 start date."

Portugal's Crypto Tax Rules - An Update secondary (analysis)

2025-10-01

"Crypto assets held for more than 365 days benefit from a tax exemption on any gains realized upon their sale."