CRYPTOCURRENCIES AND NEW OPPORTUNITIES IN TODAY'S WORLD

Crypto assets are one of the investment vehicles with the greatest untapped potential. With high volatility, they allow investors to obtain high returns through complex investment strategies.

One of the most emerging mechanisms for boosting cryptocurrencies is buying and selling. As they are speculative assets, there is currently no widespread practice of using them to purchase something such as real estate. This is due to their decentralised nature and the difficulties in tracing their origin, which poses problems in terms of compliance with anti-money laundering obligations.

Thus, purchase and sale contracts using cryptocurrencies as monetary consideration are not yet possible under the law.

However, given that this is an activity of interest to a significant number of market participants, the gap has been filled by barter contracts, which consist of the reciprocal exchange of goods.

It should be noted that the seller of the goods has the prerogative to refuse payment in cryptocurrencies. This type of transaction requires the seller's consent, as well as an agreement on the circumstances under which it should be processed.

Consequently, the transaction is subject to Municipal Property Transfer Tax (IMT) and Stamp Duty (IS), and the taxpayer must pay the taxes in cash or by other accepted means, in accordance with the General Tax Law (‘LGT’).

In addition, there are anti-money laundering obligations, i.e. obligations to trace the origin of the funds. In order for the transaction to be validated, the entity that recognises and validates the transaction is required to verify that the funds used to purchase the cryptocurrencies in question were obtained in accordance with Law No. 83/2017 of 18 August, which establishes Measures to Combat Money Laundering and Terrorist Financing (‘AML/CFT Law’), as well as other applicable legislation.

It should be noted that the loophole regarding the purchase of real estate with cryptocurrencies has not yet been integrated into Portuguese legislation. Therefore, it is up to the parties, as well as notaries and other related entities, to analyse their responsibilities and the requirements of the transaction on a case-by-case basis and with rigour.

Source:

Martinez-Echevarria Lawyers

Dr Leonor Gargaté Oliveira - Lawyer

Dr Isabel Chowdhury - Trainee Lawyer