Is the country’s crypto-friendly status at risk?
Voting opens for Portugal's general election on the morning of March 10, 2024, one month before the 50th anniversary of the Carnation Revolution – which ended Salazar's dictatorship.
The elections mark a significant change in Portugal's political landscape.
In the year In 2022, former Prime Minister Antonio Costa won a historic victory, winning 41.37% of the vote in Parliament. The centre-left Socialist Party (PS) had the green light to rule the country without having to form a coalition.
However, the socialist administration was marked by corruption and scandals, which led to the resignation of Prime Minister Costa several times. The events forced the President of the Republic to call for new elections and shook the dominance of the PS in Portuguese politics.
The latest poll by Conselmark2 shows that the election is neck and neck.
The majority of respondents – nearly 30% – support the new centre-right coalition Democratic Alliance (AD) led by candidate Luís Montenegro. But while AD may be leading the polls, he is ahead of PS's Pedro Nuno Santos by 27 percent.
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This cohesive position is particularly powerful for the newly formed right-wing political party, Chega, which won 18.2% of the vote. Founder André Ventura quickly took advantage of dissatisfaction with the ruling PS to market himself as a party to the Portuguese people.
In the lower region, the centre-right Liberal Initiative (6%), the left-wing Left Bloc (BE) (5.2%), the Ecosocialist Livre (4.6%) and the Communist Unitary Democratic Union (CDU) (2.5%) are likely to influence the government as part of a coalition. may have.
Portugal has been known worldwide for being crypto-friendly since 2016. Its unique tax regime and regulations have made the country a global hub for crypto users and blockchain companies.
How might a new government with different policies affect Portugal as a digital asset center – one of Europe's few crypto hotspots?
Portuguese elections could change crypto-friendly policies.
Portugal's political parties are unique in that all national parties have included cryptocurrency positions in their electoral programs.
The New Economy Institute of the crypto Portuguese Association, founded by prominent members of the Portuguese crypto community, highlighted the main differences within each political party.
In its updated program for 2024, the fictional political party Chega, which has expressed its desire to strengthen Portugal's status as a global crypto powerhouse, is the most favorable group. The party said it wants to expand blockchain technology into real-world use cases at the institutional level.
“We invest in technology education starting from primary education, with introductory courses on the digital economy, especially cyber security, artificial intelligence, programming and blockchain,” he said. They also want to include coding and blockchain in the school curriculum.
The center-right AD has the same position, but they only want to introduce a national education program code to put Portugal in the top 10 countries in digitalization in Europe by 2030. No mention of blockchain.
Chega also intends to study the state's possibility of using blockchain technology to “significantly reduce bureaucracy and administrative complexity and ensure greater transparency.”
The right-wing party mentioned that blockchain administrative reforms will be useful in various fields, such as property and land registration, and digital identity managed by blockchain technology.
Chega also advocates blockchain technology for administrative procedures such as licensing and certification to tackle Portugal's complex bureaucratic system, which in their opinion is a deliberate attempt to hide corruption.
Socialist PS has already activated crypto-friendly policies and wants to continue the Web3 national strategy launched by the former foreign minister, who joined the government after leaving Microsoft in 2019 – the project was discontinued after the resignation of Prime Minister Costa in December 2023.
The main political parties have a neutral or friendly policy towards cryptocurrency and blockchain regulation, which should be good news for crypto advocates living in Portugal.
But with some minor players, the winning party will have to form a coalition to form a government.
The New Economy Institute highlights how the coalition between the PS, BE and CDU is pushing the Socialist party to ditch its current crypto-friendly regime, as the latter parties are more aggressive towards digital assets.
As the New Economy Institute points out, the BE program specifies how they intend to tax “all crypto asset-related gains that are currently exempt” under Portugal's personal income tax regime. The left-wing party also wants to create a “mandatory reporting system for a person's cryptocurrency holdings and the value of all crypto transactions, including crypto-to-crypto-to-crypto, fiat and access to goods and services.”
But this hinges on whether BE will have enough power to force the socialist PS in Portugal to abandon crypto-friendly policies. This result may not prevent hard-right Chega from gaining a seat in government, as PS candidate Nuno Santos said in a televised debate that they would allow AD to run a bit.
ADD Montenegro has not confirmed or denied that it will cooperate with Chega to form a government. If Chega and AD form a government, the PS may be forced to seek a broader coalition with the Left, which could be detrimental to crypto-friendly policies.
Effects on the Portuguese crypto community
The continuation of the crypto law will have positive consequences for the Portuguese crypto community, Henrique Correa da Silva, president of the New Economy Institute, told Cointelegraph.
The only outcome that could harm the crypto community is if it goes into government. According to polls, there is little chance of this happening.
However, what will happen to Portugal if crypto-friendly policies evolve into a more restrictive approach?
For Portuguese-based crypto influencer Sebastian Montgomery, the sudden removal of a special budget for digital nomads will significantly increase his tax rate. Although the tax regime was not the sole motivation for the move to Portugal, it played a strong role.
He said he would consider leaving if crypto-related policies change too much.
But the crypto industry is very location-agnostic and can move easily, as ImmuneFi CEO Mitchell Loureiro explained to Cointelegraph:
“The crypto industry is very mobile and if the terms are uncomfortable they can easily leave. Many other countries will adopt it in a heartbeat. They can easily leave the economy they created here, along with the jobs they created.”
The Portuguese Web3 ecosystem has flourished over the years with more than 650 companies in Portugal, according to the Portuguese Web3 association Quo Vadis. Although Portugal has one of the most attractive crypto-friendly laws in the world, it ranks 58th globally for crypto adoption in 2023, according to Chinalysis.
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According to Corrêa da Silva, Portugal has a unique opportunity to create sustainable generational wealth through crypto adoption. He compared the present time to the Golden Age of Portugal, 500 years ago, when the king and the intellectuals understood that advancement was based on technological innovation and knowledge.
This understanding enhanced the Portuguese navy's ability to explore the world thanks to its innovative equipment and excellence in mathematics, astronomy, navigation, geography and wave research.
According to Correa da Silva, new oceans exist in the digital world. He believes that by exporting the best technology and know-how, Portugal can once again become a major international player and even convince expatriate Portuguese talent to return to Portugal. However, for all this to happen, the industry must be stable and developed, he said.
At stake in this election is the future of Portugal's political society, as well as the opportunity to build and strengthen a digital assets hub.
