Attention to Bitcoin: The Alert Comes From Banco de Portugal

Recently, much has been said about the Bitcoin cryptocurrency. The digital currency appreciated significantly and the market value exceeded, for the first time, 1 billion dollars.

Although everything is apparently good news, Banco de Portugal reiterates warnings to consumers about risks associated with virtual assets.

Despite several good news from Bitcoin… the alerts are many

Banco de Portugal (BdP) today issued a statement that alerts consumers to the risks associated with virtual assets, such as Bitcoin, warning that they are normally subject to “enormous volatility” and “are not guaranteed” by any national or European authority.

In particular, Banco de Portugal draws attention to the following risks:

• Virtual assets do not have a legal tender in Portugal, so their acceptance at face value is not mandatory;
• Virtual assets are not guaranteed by Banco de Portugal or by any national or European authority;
• Currently, there is no legal protection that guarantees reimbursement rights to consumers who use virtual assets to make payments, unlike regulated payment instruments;
• The information on virtual assets made available to consumers may be inaccurate, incomplete, or unclear, and the pricing of these assets is often not very transparent;
• Most virtual assets are subject to enormous volatility. In the event of partial or total devaluation of virtual assets, there is no fund to cover possible losses for its users, who will have to bear the entire risk associated with operations with these instruments. As such, the user of virtual assets may lose much or all of the invested capital;
• Virtual asset transactions can be misused in criminal activities, including money laundering and terrorist financing;
• Most of the entities that sell virtual assets are not based in Portugal, so any resolution of conflicts may fall outside the competence of the national authorities.

The BdP also recalls that, since 1 September 2020, it is the…

Authority with powers both in registration and in verifying compliance with the legal and regulatory provisions applicable to money laundering and terrorist financing, by entities that carry out any of the following activities with virtual assets: exchange services between virtual assets and fiat currencies or between one or more virtual assets; virtual asset transfer services; and custody or custody services and administration of virtual assets or instruments that allow controlling, holding, storing or transferring these assets, including private cryptographic keys.

This is not the first time that BdP has warned consumers about the risks associated with the use of virtual currencies. You can find more information here.