Here's Why Portuguese Banks Are Closing Crypto Exchange Accounts

At least three exchanges have had their accounts shut despite obtaining regulatory approval to operate in the country. The reason? The banks' fear of potential money laundering.

AccessTimeIconAug 4, 2022 at 9:45 p.m. UTC
Updated May 11, 2023 at 6:47 p.m. UTC

Portuguese commercial banks are shutting down the accounts of crypto exchanges because they want to avoid the potential for criminal activity through those exchanges.

And even though the exchanges are licensed to operate in Portugal, the banks can basically do what they want when it comes to shutting those accounts.

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  • Last week, Portugal’s largest bank, Banco Comercial Português, and Banco Santander (SAN) closed Portuguese crypto exchange CriptoLoja’s accounts. The exchange is no longer allowed to hold any capital within those banks.

    This exchange is not alone. Earlier this year, crypto exchanges Mind the Coin and Luso Digital Assets also had their accounts closed by Portuguese banks.

    Portuguese banks have been closing crypto exchanges’ accounts over the past year, citing concerns about crypto exchanges facilitating money laundering and other criminal activities.

    “From the corporate side it’s a nightmare. A simple payment is not as easy as if we had a bank account here in Portugal,” said Pedro Borges, the CEO of CriptoLoja. “This kind of nuisance, these kinds of measures that the banks are taking are not good for the country.”

    Luso Chief Product Officer Ricardo Felipe told CoinDesk that last year national bank Caixa Geral de Depósitos gave him no reason why the exchange is no longer allowed to hold accounts with the bank. Banco Comercial Português and Banco Santander said they closed accounts this year because of suspected fraudulent clients. Borges did not respond to questions about these specific allegations.

    “We already knew that this was just a matter of time and we would need to pay attention and focus our efforts on our banking relationships,” said Felipe.

    Felipe said the regulatory landscape in Portugal allows for banks to legally terminate accounts with cryptocurrency exchanges without any input from the regulator.

    “Even though we do have an [anti-money laundering] regulation or license from them, it's not something that establishes that kind of operation with the banks,” said Felipe.

    Nuno Correia, chief strategy officer and founder of Portuguese cryptocurrency exchange Utrust, told CoinDesk the company hasn’t been impacted by banks closing its accounts. However, he sees the discrepancies between the regulators and the banking sector.

    “The Central Bank of Portugal has a deep expertise, does deep due diligence in businesses and at the same time embraces innovation. [It is] not the same case for the banking sector itself,” Correia said.

    Portuguese regulatory framework

    Portuguese banks are regulated by Banco de Portugal, the nation’s central bank. According to local lawyer João G. Gil Figueira, the central bank grants licenses to various cryptocurrency companies operating in the country. However, commercially independent banks are at their own discretion to allow these companies to hold accounts in their banks and can terminate them whenever they choose.

    Figueira told CoinDesk that banks prefer to work with companies that may not raise concerns over money laundering or tax evasion, two crimes seen as commonly associated with digital asset lenders and brokers.

    “It seems that banks do not trust their own regulator’s judgment on issuing such authorizations to operate. So it’s a mixture of banks being slow-moving, unprepared, afraid of money laundering, and preferring other low-hanging fruits in other sectors,” Figueira told CoinDesk.

    Although Luso cannot hold an account with the Banco de Portugal, Felipe said he’s optimistic that European Union's upcoming Markets in Crypto Assets bill that will go into effect in 2024 will provide regulatory clarity on the relationship between commercial banks and regulators.

    The Markets in Crypto Assets law (MiCA) will provide a regulatory framework for digital asset regulation, from stablecoins to initial coin offerings, across the European Union. It will also create a common licensing regime, allowing companies to easily set up in each of the EU’s member nations.

    “With MiCA, we will turn into financial institutions. We will have that safeguard of being given partner bank accounts in Portugal, even if the bank wants to conceal them,” said Felipe.

    However, Figueira isn’t under the impression that MiCA will do anything to prevent banks from closing accounts in Portugal. Rather, it will work as a “passport” for crypto companies to operate between European nations.

    “MiCA will not have an impact in the [anti-money laundering/know your customer rules] regard, as much as it will have an impact on consumer protection, so more so on the creation, issuance and investment in such assets. It will not so much have a direct impact on the banking aspects and issues that we are discussing,” said Figueira.


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    Cam Thompson

    Cam Thompson was a news reporter at CoinDesk.