Voting commenced for the Portugal general elections on the morning of March 10, 2024, just one month before the 50th anniversary of the Carnation Revolution, which marked the end of the Salazar dictatorship. These elections signify a significant change in Portugal’s political landscape.
In 2022, former Prime Minister Antonio Costa achieved a historic victory, securing an outright majority in parliament with 41.37% of the votes. This allowed the center-left Socialist Party (PS) to govern the country without the need for coalitions.
However, the socialist administration has been marred by corruption and scandals, resulting in several resignations, including that of Prime Minister Costa. These events compelled the President of the Republic to call for new elections and have shaken the PS’ dominance in Portuguese politics.
The most recent poll from Consulmark2 shows that the election is a close race. The majority of respondents, nearly 30%, support the new center-right coalition Democratic Alliance (AD) led by candidate Luis Montenegro. However, AD only has a slight lead over the PS’ Pedro Nuno Santos, who has 27% of the votes.
This tied position has given rise to the newly established right-wing political party Chega, which has garnered 18.2% of the votes. Founder André Ventura has capitalized on the dissatisfaction with the ruling PS and positioned his party as the voice of the Portuguese people.
On the lower end of the spectrum, the center-right Liberal Initiative (IL) (6%), left-wing Left Block (BE) (5.2%), ecosocialist Livre (4.6%), and communist Unitary Democratic Coalition (CDU) (2.5%) may have the opportunity to influence the government as part of a coalition.
Since 2016, Portugal has been globally recognized as crypto-friendly. Its unique tax regime and regulations have transformed the country into a global hub for crypto users and blockchain companies.
How would a new government with different policies impact Portugal’s status as a digital asset hub, one of Europe’s few crypto hotspots?
The Portuguese elections have the potential to alter crypto-friendly policies
What sets Portuguese political parties apart is that all national parties have included cryptocurrency positions in their electoral programs. The crypto Portuguese association New Economy Institute, comprised of prominent members of the Portuguese crypto community, has highlighted the significant differences among each political party.
The most crypto-friendly party is the newly formed Chega party, which, in its updated program for 2024, expressed its intention to solidify Portugal’s position as a global crypto hub. The party aims to expand the adoption of blockchain technology with practical use cases at the institutional level. They propose investing in technology education from primary education, introducing courses on the digital economy, cybersecurity, artificial intelligence, programming, and blockchain. They also advocate for coding and blockchain to be included in school curriculums.
The center-right AD has a similar stance, but their focus is on introducing coding into the national education program to position Portugal among the top 10 countries in digitalization in Europe by 2030. However, they do not mention blockchain.
Chega also plans to explore the possibility of using blockchain technology to reduce bureaucracy, enhance administrative transparency, and improve fields such as property and land registration and digital identity management.
The socialist PS has already implemented crypto-friendly policies and aims to continue its Web3 national strategy, which was initiated by a former Secretary of State who joined the government after leaving Microsoft in 2019. The project was put on hold in December 2023 following Prime Minister Costa’s resignation.
The major political parties have either neutral or friendly policies toward cryptocurrency and blockchain regulation, which is positive news for crypto advocates in Portugal. However, some smaller parties with whom the winning party may have to form a coalition have a different perspective.
The New Economy Institute highlights that an alliance between PS, BE, and CDU could push the socialist party to abandon its existing crypto-friendly regime, as the latter parties are more hostile toward digital assets.
BE’s program specifically mentions taxing all crypto asset-related gains that are currently exempt under Portugal’s Personal Income Taxation regime. They also propose implementing a mandatory reporting system for cryptocurrency holdings and transactions, including crypto-to-crypto, fiat, and the acquisition of goods and services.
However, it remains uncertain whether BE would have enough power to compel the socialist PS to abandon its crypto-friendly policies. During a televised debate, PS candidate Nuno Santos stated that they would allow AD to govern in a minority to prevent the ultra-right Chega from gaining a seat in government.
AD’s Montenegro has neither confirmed nor denied the possibility of forming a government with Chega. If the possibility of a government with Chega and AD arises, the PS may feel compelled to seek a broader coalition with the left, potentially jeopardizing crypto-friendly policies.
Impact on the Portuguese crypto community
Continuity in crypto legislation would have positive implications for the Portuguese crypto community, according to Henrique Corrêa da Silva, the president of the New Economy Institute.
The only outcome that could negatively affect the crypto community is if BE becomes part of the government. However, polls indicate that this is unlikely to happen.
If crypto-related policies undergo significant changes, Portuguese-based crypto influencer Sebastian Montgomery stated that the removal of the special fiscal regime for digital nomads would substantially increase his tax rate. While the tax regime was not the sole reason for his relocation to Portugal, it played a significant role. If policies change drastically, he would consider leaving.
However, the crypto industry is highly adaptable and can easily relocate, as explained by Mitchell Loureiro, CEO of Immunefi. The Portuguese Web3 ecosystem has flourished in recent years, with over 650 companies in Portugal. Despite having one of the most favorable crypto-friendly legislations worldwide, Portugal ranks 58th globally for crypto adoption, according to a 2023 Chainalysis study.
Corrêa da Silva believes that Portugal has a unique opportunity to create sustainable generational wealth through crypto adoption. He draws a parallel between the current moment and Portugal’s golden age 500 years ago when the country embraced technological innovation and knowledge. This enabled the Portuguese navy to explore the world, thanks to advancements in weaponry, mathematical sciences, astronomy, navigation, geography, and the study of tides.
He believes that Portugal can once again become a major international player by exporting cutting-edge technology and expertise, and even attracting Portuguese talent living abroad to return. However, he emphasizes the need for the industry to stabilize and mature for this vision to become a reality.
In this election, the future of Portuguese society and the opportunity to establish and strengthen a digital asset hub hang in the balance.