By Andrea Hargraves 
There is no regulation in Portugal for crypto-assets and therefore not much can be done in financial supervision. “It’s important” that this changes, Gabriel Bernardino, chair of the Securities Market Commission (CMVM), admitted at a press conference on Monday, February 21. But in addition to warning that he will intensify warnings about the risks of these investments, the head of the Financial Markets Authority has indicated European regulations that may give him powers.
“What we can do is alert investors and those who invest, if they want to invest, do so knowing the risks. We don’t have direct jurisdiction over that,” Gabriel Bernardino admitted on Monday, February 21, at the press conference at the regulator’s headquarters, in Lisbon, to showcase CMVM Priorities for 2022-2024.
According to the new Chairman of the Board, CMVM “will not fail to continue its contribution to the provision of information relating to these investors.” He continued: “We are dealing with an unregulated area, with very large fluctuations, where there may be mechanisms that will not be the most effective from the point of view of price development, where there may be potential manipulation and fraud.” Regarding the fraud, Bernardino said he was not aware of cases in Portugal, but warned that it could happen. “We are seeing cases of potential fraud mechanisms emerging, it is important that investors in these areas are aware and pay close attention.”
Fostering information about digital developments and trends is one of CMVM’s five strategic guiding principles for the next three years.
CMVM acknowledges receiving permissions
At the moment, the regulator has no supervisory powers (in this area, only Banco de Portugal has to grant permission to operate in the crypto-asset space for the purpose of preventing money laundering), but Bernardino believes that will change. “I fully admit that these terms of reference come with the implementation of European regulations,” he said.
The European Regulation (MICA) is being prepared that equates certain assets with securities and in this area CMVM may acquire competences. “There are issues with access and market platforms, where it makes sense to oversee CMVM,” he says, noting, however, that the legislative authorities (government and parliament) will then decide the distribution of powers.
In any case, at the moment, the government does not have legislation prepared to change the supervision of this area of investment – in financial terms, there has been binding information from the IRS which, not legally, refers to a framework in which there is no capital gains tax on investment in these assets. CMVM does not, at this time, have a proposal on the table to change the legislation – “but I don’t rule out what might happen,” says Bernardino.
The regulation has been prepared. More is needed
With the regulation to be prepared in European bodies, Gabriel Bernardino, in his responses to journalists, admitted that by itself would not be enough to seize all new branches of crypto assets, including NFT (Icons non-fungibles, a type of digital certificate of authenticity) or new platforms.
The president of the European Committee for Culture and the Arts (CMVM) believes that European regulations will leave out the “essential elements” that will “frame all activities,” but since they are all different, there are “facts” that will require specific regulations, he said.
“The emergence of crypto assets and codingmarket infrastructures and contracts based on decentralized ledger technology (blockchain) and the development of artificial intelligence mechanisms applied to the ever-increasing amount of available data presents a high potential to disrupt traditional financial intermediation business models, providing a glimpse into the competitive advantages, but also risks that must be continually assessed with consideration,” notes CMVM, in presenting the challenges of implementing the guidelines The five strategy.
Five strategic guidelines
- Giving priority to fair treatment of investors
- Promoting investment and long-term savings through the capital market
- Simplify regulations and strengthen preventive, proportionate and risk-based supervision
- Adopt a positive attitude towards financial innovation and promote the transition to a more sustainable economy
- Develop human capital and information management capacity