PORTUGAL Law and Practice Contributed by: João G Gil Figueira, Rodrigue Devillet Lima and Catarina Andrade Miranda, GFDL Advogados
the “same activity, same risks, same rules” prin - ciple. In practical terms, the convergence between the applicable legal framework set for legacy play - ers and that for fintech industry participants has translated into higher entry costs to “new play- ers” but, at the same time has provided much- needed legal security when deploying a new financial solution in the market. Legacy players are expected to have an initial advantage when digging into the fintech space, considering the need to comply with tighter and heftier compliance, supervision and regulatory obligations. However, if they are able to over - come the regulatory burden set by the national and EU regulations, new players will often enjoy more flexible management and a swifter deci - sion-making process, allowing them to develop and deploy new solutions to address market needs that are “off the radar” of legacy players. In some cases, some regulatory exemptions will apply, which may render the development of a fintech project substantially easier. 2.5 Regulatory Sandbox In 2021, the Portuguese Government enacted general principles for creating and regulating Technological Free Zones, which could lead to the creation of regulatory sandboxes. Nonethe - less, there is no particular regulatory sandbox in Portugal for fintech projects. This means that most industry participants must comply in part or in full with applicable regulations (some of which are listed in 2.2 Regulatory Regime ). In 2018, the Portuguese regulators created an innovation hub named the “Portugal FinLab” , opening a communication channel with new players in the fintech industry. The three main regulators participating in the FinLab are Autori-
dade de Supervisão de Seguros e Fundos de Pensões ( “Insurance and Pension Funds Super- visory Authority” ), Banco de Portugal ( “Bank of Portugal” ) and CMVM ( “Portuguese Securities Market Commission” ), which are usually the three leading independent regulators in the Por - tuguese jurisdiction. Portugal FinLab’s purpose is to provide a com - munication channel between the regulators that allows start-ups and new players to navigate the complexity of the legal framework. However, it is not a sandbox facilitator. The only sandbox regime applicable is the DLT Pilot Regime, but it is not domestic in nature. In 2023, CMVM launched a new sandbox ini - tiative called “The Sandbox Market4Growth” . This initiative marks a strategic step towards a more dynamic, adaptable, and inclusive financial ecosystem by enabling companies to simulate fundraising through stock and bond issuance or venture capital investment. The simulator is avail - able to domestic and foreign companies seeking access to the Portuguese capital markets. One of the main goals of Sandbox Market4Growth is to promote financial inclusion, encourage the creation of accessible and efficient financial ser - vices, and support the competitiveness of Por - tugal’s finance industry by fostering a culture of innovation and adaptability. 2.6 Jurisdiction of Regulators Four main national regulators have jurisdiction over industry participants, each with a specific field of jurisdiction: • The Bank of Portugal acts as the Portuguese Central Bank and is therefore integrated into the European System of Central Banks under the European Central Bank. It is tasked with monitoring and supervising financial, pay -
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