Similar to many other countries, Portugal does not consider cryptocurrency as a legal tender. Portugal’s stance towards cryptocurrencies is similar to the United States where cryptocurrency is actively being traded. In terms of regulation, Portugal is looking towards the European Union regulatory guidelines. This is necessary because even if they come up with their regulations, this may not be in sync with EU’s view on cryptocurrencies.
The Eurogroup is a group of 19 Finance ministers within the European Union. Once every month, they will meet up to discuss more economic and monetary policy which are implemented across the European Union. For cryptocurrencies to be taken seriously, there needs to be a global standard regarding regulation. In fact, having a more coordinated approach towards regulations will improve the growth of the blockchain factor in cryptocurrencies.
The notion is agreed on by finance ministers from France, Germany and the UK that has called for greater coordination in the discussions that are taking the stage at the upcoming G20 meeting. This will be held at Argentina.
How Ripple is changing the landscape
The Portugal government did hinting that there might be a regulatory solution looming ahead of the country. This is understandably so because the price of cryptocurrencies is highly volatile. Similar to many other banks around the world, the Portuguese bank is unsure how they should react to the situation at hand. With the fluctuating prices of Bitcoin that can easily reach new highs and lows at random times, the decision has to come soon.
In fact, Bitcoin can be a benchmark for many other alternative currencies in the market. If the price of Bitcoin does make a dip, the price of other cryptocurrencies tends to do the same. As a result of the exponential growth of Bitcoin, Banco Santander-Portugal which is the fourth-largest Portuguese bank had to stop the customers cryptocurrency trading activity. However, not many customers agree with the move made by the bank. Since then, over 1000 customers have protested against the bank by signing a petition.
In their protest, the customer stated that the bank is not supporting financial innovation that can potentially shift the Portuguese economy. An example of the cryptocurrency that can change the financial landscape is Ripple. This is a cryptocurrency that works on improving cross-border payments by utilizing the blockchain. It was reported that their infrastructure is currently being tested by 100 being worldwide.
Proponents of cryptocurrencies see this move from the Portuguese government and banks as a step backward. As more countries around the world are adopting blockchain, Portugal should not be left behind. After much pressure from the society, the Santander Group has finally decided to integrate the usage of blockchain in their system. It was implemented towards the end of 2017.
As the blockchain facility did so well in the system, the bank also decided to change their mind about the policy to shut down their customer’s cross-border cryptocurrency trades at foreign cryptocurrency exchanges. Moreover, the bank is currently committing itself to creating a leading international blockchain payment ecosystem. It seems like they have understood the potential of the blockchain.
Ripple is a phenomenal cryptocurrency that has been working hard towards putting forth their blockchain infrastructure. At the moment, Ripple is the third largest cryptocurrency in the market based on their capitalization in value. Ripple aims to create highly secure and low global financial transactions fees.
To use the Ripple platform, two parties must be present. On the one hand, there is the regulated financial institutions which will take funds and issue balances on behalf of the customer. On the other hand, market makers such as hedge funds will help provide liquidity in the currency that customers want to trade. As mentioned earlier, Ripple is gaining mainstream acceptance as more than 100 banks have integrated their infrastructure in their system.
No personal income taxes for cryptocurrencies
After the Portuguese banks enable customers to trade on cross-border foreign cryptocurrency exchanges, more good news arrived in Portugal. Personal income taxes won’t apply to cryptocurrencies. Therefore, all the gains that a trader makes from cryptocurrency will not be taxed unless the individual has a business or professional activity that earns income within that context. This is a huge leap forward compared to other countries that do tax the capital gains out of selling cryptocurrencies.
As many participants in the cryptocurrency market are investors that do not have their own business, they are at an advantage. Only in the case where the trading constitutes a business or a professional activity, they will be taxed. One thing to keep in mind is that doing cryptocurrency transactions on a foreign cryptocurrency exchange will be subject to foreign countries taxation.
Portugal’s approach to taxation is very different from the US as cryptocurrency is considered as a capital asset there. Capital gains will also be taxed, and the resale of the cryptocurrency will be taxed as ordinary income. In conclusion, Portuguese traders, have every reason to celebrate because they are now able to trade on cross-border foreign cryptocurrency exchanges and they can freely trade cryptocurrencies.