As governments around the world are eyeing cryptocurrencies’ advance warily, a country in the European continent has become a crypto paradise.
According to a report by the AFP news agency, Portugal, a southern European country bordering Spain, has become a haven for bitcoiners.
Currently, Portugal is one of the last countries in Europe to regard cryptocurrencies as currencies from a tax point of view, meaning profits from trading are not taxed.
“You don’t need to do anything else because you already have a perfect system, with zero percent tax on bitcoin,” said Didi Taihuttu, a prominent crypto enthusiast who shifted his family to Portugal from the Netherlands.
The agency said that the country has long sought foreign cash by giving tax breaks and special visas to foreign investors and so-called digital nomads — those who work online without the need for a fixed business location.
And the tax regime is not the only appeal — beaches, climate, and cuisine all figure, particularly for people from northern Europe.
Portugal’s finance ministry is reviewing the situation and wanted a common European framework, but the pressure is building for quick action.
Mariana Mortagua, a far-left MP, called recently for urgent regulation and summed up the situation bluntly: “Portugal has become a tax haven”.
If internal pressures don’t force the Portuguese government’s hand, then intervention could come from outside.
Fabio Panetta of the European Central Bank sounded the alarm on crypto late last month when he said the ecosystem showed “strikingly similar dynamics” to the sub-prime mortgage bubble that helped tank the world economy in 2007.
Crypto-assets now have a far higher market capitalisation than the $1.3 trillion of bad loans that sparked the global financial crisis.
He accused “crypto evangelists” of promising “heaven on Earth” while hawking a glorified Ponzi scheme — because crypto-assets are generally not backed by any streams of revenue, they rely on money from new investors to keep prices high.
If new investors dry up, the asset price tanks.
(With AFP inputs)