PORTUGAL Law and Practice Contributed by: João G Gil Figueira, Rodrigue Devillet Lima and Catarina Andrade Miranda, GFDL Advogados
ones, has risen in recent years. In turn, fintechs have created new and ingenious ways to streamline proce - dures to comply with all the new impositions set by these new legislations and regulations. The category under which a potential regtech could theoretically be considered regulated needs to be assessed on a case-by-case basis, depending on the depth and level of “compliance activity” being devel - oped. Assessing whether a particular solution is within the scope of a regulated sector or profession is not simple. For example, KYC services are strongly prone to being outsourced. In this case, the fintech solution provider should be aware that this third-party service provider could fall within the scope of the AML Act. Another issue that should be considered when devel - oping a regtech project is to be aware that certain outputs can be construed as legal advice, which in some jurisdictions is illegal because such advice is reserved for licensed professionals such as lawyers, financial analysts and advisers. Considering that, in most cases, regtech solutions tend to require access to sensitive and personal data, all projects will fall under GDPR rules and DORA. 9.2 Contractual Terms to Ensure Performance and Accuracy As stated in 9.1 Regulation of Regtech Providers , there is no specific set of provisions for regtechs. While DORA and GDPR do not explicitly reference regtech, their provisions are applicable to financial services firms. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry To engage with this emerging trend, traditional banks, insurance firms and asset management entities are actively fostering their own financial innovations. They either outsource specific tasks to relevant service providers, form collaborations or partnerships with them or actively endorse and integrate with promising start-ups. This constitutes a change in legacy players’
approach to blockchain and cryptocurrencies, a topic mostly shunned or ignored in the past. Blockchain technology can, for example, play a sig - nificant role in new methodologies for authenticating the identity of economic agents due to the multilat - erally controlled nature of information present in a registry concerning past operations and behaviours. Additionally, it can enable or enhance peer-to-peer financing mechanisms through the internet and even allow for efficiency gains in accounting and auditing procedures within banking activities. 10.2 Local Regulators’ Approach to Blockchain There is no specific regulation for blockchain or DLT as a standalone technology in Portugal. The regulatory focus on blockchain is limited to its use in the context of services involving securities, payments, financial intermediation or investment services, in addition to tackling any money-laundering-enabling features it may have. The most recent set of rules stems from the DLT Pilot Regime. DLT financial instruments are financial instru - ments within the meaning of MiFID II that are issued, recorded, transferred and stored using a distributed ledger technology. One of the existing types of DLT, and the most well-known, is blockchain. The new Portuguese legislation encompasses a wide range of activities for operators of DLT-based market infra - structures. Operators are authorised to: • provide registration and deposit services for DLT financial instruments; • manage multilateral trading systems; • manage securities settlement systems; • receive, transmit and execute orders on behalf of others; • manage portfolios on behalf of others; and • trade on their own account. However, Decree-Law No 66/2023 is limited to shares, bonds, and units of participation in collective invest - ment schemes. These operators’ roles are financial intermediaries under the Portuguese Securities Code, and the CMVM
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