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There is no specific regulation in Portugal regarding blockchain or distributed ledger technology. Blockchain has brought significant regulation to the banking and finance sectors, including cryptocurrencies and initial coin offerings (ICOs), notably regarding investor protection and fraud prevention. Tokenization of assets is currently unregulated (and securities in particular, such as bonds and shares), although nothing in the law appears to generally prohibit it. We see no impediment in principle to tokenizing assets or credits, so long as the parties in a given transaction agree to dematerialize both the agreement and the underlying assets (and to represent the assets in tokens). It would not, however, apply to assets requiring special registration or notarisation formalities (such as real estate assets), as this would require formal legal recognition by the government or registration office.1
The approach to cryptocurrencies is that they are not qualified as legal tender or currency. As early as 2013, the Bank of Portugal (BoP) concluded that Bitcoin did not constitute secure currency given its lack of regulation and supervision. Similarly, the European Banking Authority (EBA) has taken a similar stance. Despite this, the BoP has stated that using cryptocurrencies does not constitute an illegal act. Therefore, the Bank's strategy towards cryptocurrencies is preventive and educational with a focus on increasing awareness of potential risks.1
As with most European regulators, the BoP and CMVM share this understanding and have been taking a wait-and-see approach to European regulations. This has culminated in the proposal for regulations contained in the Digital Finance Package (notably the Regulation on Markets in Cryptoassets (MiCA)), which will create a harmonised and broader European framework for both cryptoassets and blockchains.1
Once regulations are in effect, security tokens and other hybrid tokens exhibiting security-like features should be subject to the guidance issued by the European Securities and Markets Authority on January 9, 2019. Cryptoassets that qualify as transferable securities or another type of financial instrument under MiFID II must observe all applicable EU financial rules, such as those outlined in MiFID II and the Prospectus and Market Abuse Directives. We can anticipate that the Comissão do Mercado de Valores Mobiliários (CMVM) will evaluate ICOs on a case-by-case basis in a manner consistent with the European Securities and Markets Authority (ESMA). This approach was clearly demonstrated in 2018 when the CMVM chose not to impose the public offering regulations and securities frameworks following an examination of Bityond's white paper, its token configuration, associated rights, and commitments which did not possess features commonly related to tradable securities.1
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