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Know your rights when making payments in Europe.
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Key tips to protect yourself when choosing online or mobile banking services.
Crypto-assets, also called “virtual assets”, are digital representations of values or rights that can be transferred and stored electronically. They are based on the blockchain, a type of technology of decentralised registration of information that does not have a central administration.
Although they can be employed to make payments, they are mostly used as investment assets, since their value suffers significant fluctuations.
Crypto-assets are often called “virtual currency”. However, they cannot be considered real currency.
Crypto-assets are not prohibited, but they come with associated risks and there is no supervisor or rules to ensure the funds invested are safe.
The euro and other currencies issued by central banks are legal tender and perform the following three essential functions of money:
Crypto-assets are not real currency, in that they are not legal tender nor do they fulfil the functions of money:
Transactions with virtual assets (crypto-assets) have many associated risks:
Issuing and trading virtual assets is not illegal nor prohibited, but it is only regulated and supervised in the context of preventing money laundering and terrorist financing (ML/TF).
The Banco de Portugal is the Portuguese competent authority responsible for registering entities that operate with virtual assets and verifying compliance with the obligations for the prevention of ML/TF. However, this supervision only covers some entities, excluding digital-only platforms and those with no tax obligations in Portugal. The list of virtual asset service providers registered with the Banco de Portugal can be found here.
The Banco de Portugal’s intervention does not extend to other domains, that is prudential, banking conduct or any other nature. There is no supervisor verifying whether these entities are sound and capable of delivering on their commitments over the medium and long term. There is also no supervisor ensuring these entities are correctly informing their customers on their services and associated risks.
Is there a way for economic agents to benefit from the advantages of digitalisation and, at the same time, have access to real currency, without liquidity or solvency risks?
The solution may be to issue central bank digital currency, an option which is being weighed up throughout the world. The European Central Bank (ECB) and euro area central banks, including the Banco de Portugal, are potentially looking into issuing a digital euro.
As with euro banknotes and coins, the digital euro might one day be used by citizens and firms in day-to-day payments, with total security and legal protection. It is being considered as a reliable and, presumably, cost‑free means of payment that will complement – and never replace – cash.
The digital euro will be very different from crypto-assets, as it will be:
Banco de Portugal’s website > Virtual assets
Banco de Portugal’s website > Registration of virtual assets service providers