The rapid growth of the fintech industry has propelled blockchain technology and cryptocurrencies into the spotlight. In response to this trend, the governments of Portugal and Spain have introduced regulatory frameworks to oversee and license cryptocurrency-related activities.
These licences, issued by the central banks of each country, aim to ensure the protection of consumers and the proper regulation of crypto trading activities. In this article, we will explore the requirements and procedures for obtaining crypto licences in Portugal and Spain, highlighting the advantages and risks associated with these licences.
Portugal's Crypto Licence:
In April 2022, Bison Bank, a Portuguese financial institution, became the first bank in Portugal to receive a licence from the Banco de Portugal (Central Bank of Portugal) to operate as a virtual asset service provider (VASP). This licence allows Bison Bank to offer cryptocurrency storage and trading services through its subsidiary, Bison Digital Assets. To engage in cryptographic activities in Portugal, individuals and companies must register with the Banco de Portugal and comply with applicable anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.
Requirements for Crypto Licence in Portugal:
To obtain a crypto licence in Portugal, several requirements must be fulfilled, including the following:
Submit a request to the Portuguese Free Economic Zone (IBCM) for prior authorisation to license a company.
Complete the registration procedure for a Portuguese company.
Obtain an MBCM licence.
Apply for a licence to exchange cryptocurrencies with the Banco de Portugal.
Appoint an anti-money laundering officer and a local director.
Open a settlement account with a Portuguese bank.
Fulfil responsibilities such as client identification, risk profiling, transaction monitoring, and reporting suspicious activities.
Advantages of Crypto Operations in Portugal:
Portugal offers several advantages for crypto businesses, including:
No restrictions or obligations to declare cryptocurrency assets.
No minimum share capital requirement for companies.
No income tax on cryptocurrency income.
Possibility to purchase real estate using cryptocurrency.
Spanish Crypto Licence:
In Spain, the Bank of Spain has established a special register for organisations involved in cryptocurrency exchanges and e-wallet creation. The new legislation requires crypto providers to obtain certification, and failure to register can result in substantial fines. The regulatory framework focuses on combating illegal money circulation and terrorism financing, ensuring the proper functioning of virtual asset service providers (VASPs).
Regulation of Cryptocurrency in Spain:
Spain has implemented certain regulations concerning the use and taxation of cryptocurrencies. Here are some important points to consider:
Taxation of Personal Income: Earnings exceeding EUR 1,000 from a single cryptocurrency transaction are subject to personal income tax. These gains or losses should be reported under the capital gains and losses section.
Tax Base Calculation: The tax base is determined by subtracting the purchase value of virtual coins from the sale value.
Tax Rates: The tax rates imposed on profits from cryptocurrency investments vary depending on the amount of profit generated. Income up to EUR 6,000 is taxed at a 19% rate, income between EUR 6,000 and EUR 50,000 is taxed at a 21% rate, income exceeding EUR 50,000 is taxed at a 23% rate, and income over EUR 200,000 is taxed at a 26% rate.
Application for Crypto Exchange Licence in Spain:
To obtain a crypto licence in Spain, companies need to register as a Virtual Asset Service Provider (VASP) with the Bank of Spain. The registration process involves submitting an application electronically or in person, accompanied by required documentation such as registration forms, suitability assessments, manuals for anti-money laundering measures, and risk analysis documents.
The following formalities must be fulfilled:
Entity Registration: Register an entity such as a Sociedad Limitada (SL), which is the Spanish version of a limited liability company and is currently the most popular choice.
Physical Office: Ensure that your cryptocurrency company has a physical office in Spain.
Clear Criminal Record: Shareholders must provide evidence of a clear criminal record.
Business Plan: Prepare a detailed business plan outlining your intended activities, platforms you will work with, and customer protection and security policies.
Bank Account and Central Bank Approval: Open a bank account and obtain approval from the Central Bank of Spain for virtual currency transactions.
Experienced Staff: Ensure that your company's employees have experience in the cryptocurrency field.
Anti-Money Laundering Compliance: Comply with the Anti-Money Laundering Law in Spain.
Anti-Money Laundering Regulations in Spain:
The Royal Decree 7/2021, based on EU directives, regulates money laundering prevention in Spain. Since virtual currency is considered part of the Spanish financial system, entrepreneurs operating cryptocurrency companies in Spain must comply with these laws, which include implementing anti-money laundering measures and ensuring customer protection and security.
Considerations and Risks:
Both Portugal and Spain have recognised the risks associated with cryptocurrency operations, including the potential for illegal activities, consumer protection concerns, and market volatility. It is crucial for companies to establish robust anti-money laundering and counter-terrorism financing measures, including client identification, transaction monitoring, and reporting of suspicious activities.
The introduction of crypto licences in Portugal and Spain reflects the growing importance of cryptocurrencies and blockchain technology in the financial landscape. These licences provide a regulatory framework to ensure the integrity of crypto operations while protecting consumers and combating illegal activities. Portugal and Spain offer unique advantages for crypto businesses, including favourable tax treatment and the acceptance of cryptocurrencies for real estate transactions. However, companies must navigate a complex registration process and fulfill their responsibilities regarding anti-money laundering measures. As the Iberian Peninsula embraces cryptocurrencies, it positions itself as an emerging hub for innovation and disruption in the crypto space. With a deep understanding of the regulatory frameworks and market dynamics in both countries, SAXE Global is well-equipped to assist businesses in navigating the complex registration process and meeting their obligations in terms of anti-money laundering measures helping crypto businesses optimise their financial operations and maximise their growth potential.
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