PORTUGAL Trends and Developments Contributed by: Diogo Pereira Duarte, Ricardo Henriques, Isabel Pinheiro Torres and João Diogo Barbosa, Abreu Advogados
opment of a truly European crypto industry will also be relevant for achieving investor expecta - tions, with great attention being brought by the MICA-sanctioned possibility of cross-border service provision. Efforts to advance the Digital Euro project could also play a transformative role in the European fintech landscape, including Portugal, as early as 2025. As the European Central Bank (ECB) moves closer to the potential launch of the Digi - tal Euro, it will serve as a digital version of the euro currency, issued and regulated by the cen - tral bank, complementing cash and bank depos - its. The Digital Euro will significantly affect digi - tal payments, financial inclusion, and monetary policy. The Bank of Portugal (BoP) has been at the forefront of regulatory discussions, and early adoption is expected to create opportunities for the local industry. For fintech companies, the Digital Euro will pro - vide new opportunities for innovation, particular - ly in payment systems and embedded finance. Digital wallets, mobile payments, and e-com - merce platforms must integrate the Digital Euro into their service offerings, enabling seamless payments within the digital economy. Addition - ally, the Digital Euro will provide a safer alterna - tive to cryptocurrencies, which remain volatile, allowing consumers and businesses to make payments and store value with confidence. Payment services and Electronic Money Institutions Payment services have been a focal point of fin - tech innovation and developments in the Portu - guese fintech sector. With expected regulatory developments arising from the third Payment Services Directive (PSD3) and the new Payment Services Regulation, companies have begun to invest more time and effort in compliance with
the current legal framework to access a more favourable transitional period in the near future. Payment Service Providers (PSPs) are increas - ingly in demand, and their scope and relevance in the financial sector are widely recognised. By 2025, Electronic Money Institutions (EMIs) will play an even more integral role in the pay - ments ecosystem. As demand for digital pay - ments continues to rise, it is widely expected that EMIs will be at the forefront of offering fast, secure, and efficient alternatives to traditional banking. The PSD3 and Digital Euro initiatives will significantly impact EMIs, as these regu - lations introduce more stringent rules around consumer protection, transparency, and digital currency adoption. Embedded finance may also contribute to accelerating the growth of EMIs in 2025. Non-financial businesses are expected to partner with EMIs to integrate financial services directly into their platforms, offering everything from payment solutions to digital wallets. This trend will broaden the scope of services provid - ed and increase competition among digital pay - ment providers as more sectors adopt financial services into their everyday operations. As EMIs continue to offer frictionless cross-border trans - actions, they will likely become crucial players in facilitating digital payments across international markets. With regulatory frameworks for cross- border payments becoming more harmonised, EMIs will be better positioned to offer wider solu - tions to consumers and businesses. In addition, the rise of open banking will encour - age EMIs to integrate more robust data-sharing capabilities, giving consumers greater control over their finances while enabling EMIs to deliver tailored solutions. In the regulatory space, EMIs will face increased scrutiny as they manage digi - tal wallets, transaction data, and payment infra - structure. This will require substantial invest -
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