PORTUGAL Law and Practice Contributed by: Nuno Lima da Luz and Tomás Gomes da Silva, Cuatrecasas
looking to trade and settle financial instruments using DLT. 1.1.3 Regulation of Blockchain Technology The Portuguese government and regulators gener- ally maintain a progressive, pro-innovation attitude towards blockchain. The focus is on encouraging industry growth and attracting foreign investment, while concurrently mitigating anti-money laundering (AML), countering the financing of terrorism (CFT), and market abuse risks. The approach is not to prohibit particular use cases outright, but rather to bring them inside the regulatory perimeter – such as bringing Vir- tual Asset Service Providers (VASPs) under the scru- tiny of the Bank of Portugal for AML/CFT purposes and ensuring CASPs align with MiCA. Blockchain as a standalone underlying technology (without the issuance or transfer of crypto-assets) is not specifically regulated by a single dedicated legal framework in Portugal. Instead, it is governed by general civil, commercial, and administrative laws. For regulated financial firms using blockchain-enabled solutions or outsourcing node maintenance to third- party tech providers, strict operational requirements apply. They must adhere to the European Banking Authority (EBA) Guidelines on Outsourcing and the EU’s Digital Operational Resilience Act (DORA). Regu- lated entities bear the ultimate responsibility for data security, operational continuity, and risk management when employing DLT solutions. The General Data Protection Regulation (GDPR) applies fully to blockchain-based products and ser- vices in Portugal. Applying the GDPR to blockchain presents structural challenges, particularly concern- ing the “right to be forgotten” (right to erasure) and data rectification. Because blockchains are inherently immutable and append-only, erasing a personal data entry natively written on a public chain is fundamen- tally incompatible with the technology. At a high level, regulators and practitioners address this by advising that sensitive personal data should never be stored on-chain. Instead, best practices dictate storing per- sonal data off-chain (in traditional, mutable databases) while only storing a cryptographic hash or a pointer on the blockchain. If a user exercises their right to be forgotten, the off-chain data is deleted, rendering the
on-chain hash meaningless and successfully comply- ing with the GDPR. 1.1.4 Smart Contracts Smart contracts are capable of being enforced in Por- tugal, though they are not explicitly addressed by a dedicated standalone statute. To ensure enforceability, smart contracts must meet the general requirements for contract formation under the Portuguese Civil Code: • mutual consent (a matching offer and acceptance); • capacity of the parties; • a determinable object; and • legal purpose. Legal scholars often differentiate between the “smart legal contract” (the underlying agreement or intention of the parties) and the “smart contract code” (the soft- ware executing the agreement). Under the EU e-Commerce Directive, implemented in Portugal by Decree-Law No 7/2004, electronic con- tracts – including those executed automatically – are recognised as legitimate and binding as long as they guarantee reliability, intelligibility, and integrity. However, there are limitations regarding formalities. Under Portuguese law, certain types of contracts (eg, the transfer of real estate property, or certain types of guarantees) require strict formalities, such as execu- tion via a public deed before a notary. These specific formal requirements cannot currently be fulfilled purely through a smart contract on a blockchain, meaning the smart contract can only serve to execute the pay- ment or conditions of a transaction that is formalised off-chain. 1.1.5 Industry and Trade Bodies There are prominent industry and trade bodies repre- senting the blockchain sector in Portugal. • Associação Portuguesa de Blockchain e Cripto- moedas (APBC): the APBC is a prominent non- profit association established to promote the advancement of blockchain technology and the adoption of cryptocurrencies in Portugal. Its role
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