Bitcoin and Property Rights in Portugal: A Legal and Conceptual Analysis

Article written in collaboration with Nuno Lima da Luz

Bitcoin has come to challenge not only how money works but also the very foundations of law and property rights. Its decentralized nature, combined with its cryptographic base, means that Bitcoin does not fit neatly into any traditional category of possession or ownership. Portuguese law has already begun to adapt to this new reality. However, to understand how Bitcoin relates to property rights in Portugal, it is necessary to combine the context of Portuguese property law with the legal framework that exists in practice.

Traditional Categories of Property

In most jurisdictions, including Portugal, personal property is divided into two distinct categories. The first is “corporeal goods,” which refers to tangible objects such as a chair or a coin—things that can be physically held and touched. The second category refers to “obligational rights,” that is, intangible rights such as shares or debts, which require legal action to be enforced. Bitcoin does not fit into either of these categories. It is not a tangible asset, as Bitcoin is not a corporeal good, does not exist in a specific location, and cannot be possessed in a physical sense. Moreover, unlike shares or debts, owning Bitcoin does not depend on the legal system to ensure its possession.

This has led various jurists and lawmakers around the world to advocate for the creation of a third and new category of private property to accommodate cryptographic assets. Something would fall into this new category if it were composed of electronically represented data, existed independently of people and of the legal system, and were a rivalrous good—meaning that possession or use by one person prevents simultaneous possession or use by another. Bitcoin clearly meets these conditions, reinforcing the need to develop a new classification of private property that reflects these unique characteristics.

Ownership vs. Control in Crypto Assets

Furthermore, there is a challenge in distinguishing ownership from control. With physical goods, possession is often a strong indicator of ownership. However, in the realm of crypto assets, control is exercised through cryptographic private keys. Whoever holds the private key can exclude all others from those units of bitcoin, spend them by transferring them to another person or entity, and identify themselves as the individual capable of exercising these powers through a cryptographic digital signature. This control resembles possession, but it is not identical to ownership, and there are edge cases that expose this difference.

For example, when two people have control over the same cryptographic private key or know the seed phrase from which it can be generated, both have the ability to spend those Bitcoin units. In such situations, control cannot be the sole determinant of ownership, and the law must be capable of intervening to resolve such disputes—just as it has done for centuries in cases of shared ownership.

It is important to note that Bitcoin itself does not confer ownership rights. The cryptography on which it is based merely ensures that whoever holds the private key has the technical ability to move the asset. Property rights arise only when the State recognizes control as ownership. Without such recognition, Bitcoiners may find themselves in difficult situations, as disputes cannot be definitively resolved. However, with this recognition by the State, the system gains greater clarity and becomes fairer.

The Monetary Dimension of Bitcoin

The monetary side of Bitcoin also adds another layer of complexity. The monetary unit lies at the heart of any monetary system, representing purchasing power that inevitably fluctuates with inflation or deflation. Under Portuguese law, monetary obligations are defined as obligations to provide value quantified in a particular monetary unit, regardless of the form that value takes. Thus, Bitcoin can serve the same structural role that the Euro plays today.

A debt denominated in Bitcoin is no different from a debt denominated in Euros. Bitcoin can serve as a unit of account to quantify monetary obligations and as a means of payment to discharge a debt. Despite its volatility—which reduces trust among some users—Bitcoin can function as money just like any fiat currency. There is an increasing level of both practical and legal recognition supporting the view that monetary obligations in Bitcoin are true monetary obligations and not merely digital or speculative contracts.

The Legal Framework in Portugal

In Portugal, the law already accommodates this reality. Crypto assets are legally recognized as digital representations of value or rights that can be stored and transferred electronically. Both individuals and legal entities are free to buy, sell, transfer, and hold Bitcoin or other digital assets. Control of the private key is viewed as an indicator of ownership, since it effectively allows possession to be exercised over a specific asset by transferring it to another wallet. Digital assets can also be seized by court order, just like any other financial asset.

Moreover, contracts denominated in Bitcoin are also legally permissible in Portugal. Property transactions have already been executed using cryptocurrency payments. When a property is purchased directly with Bitcoin, without converting the funds into euros, the law treats that transaction as a barter rather than a conventional sale in legal tender. To ensure compliance with anti–money laundering regulations, notaries already proceed with identifying the parties involved in the purchase and sale, registering the holding and transfer of crypto assets, and conducting valuation comparisons in large transactions. At the same time, Portuguese law preserves certain limits; for instance, monetary obligations such as public debts and taxes cannot be paid in Bitcoin unless both parties agree, since crypto assets are not recognized as legal tender.

The Principle of Self-Custody

Underlying everything described in the previous sections is the principle of self-custody. One of the great revolutions made possible by Bitcoin is that individuals can now custody their assets directly, without relying on other entities, institutions, or intermediaries to ensure safekeeping—thus eliminating counterparty risk. Therefore, the law must continue adapting to this reality, recognizing the importance of this control and guaranteeing it, while also developing mechanisms to resolve disputes when control over the asset is shared or contested.

Bitcoin has exposed the fragilities of traditional property categories, existing independently of the legal system. Portugal has already taken important steps in recognizing Bitcoin and other crypto assets as legitimate assets, enabling contractual payments and exchanges with other assets, while also establishing legal mechanisms to seize crypto assets.

Future Challenges and Opportunities

Even so, challenges remain. Payments that must be made in legal tender fall outside Bitcoin’s domain, requiring mutual acceptance for obligations to have a discharging effect. There is also a need to develop a legal mechanism capable of handling the sharing or theft of cryptographic private keys.

However, as Bitcoin adoption continues to gain traction globally, Portugal has an opportunity to remain at the forefront and demonstrate clarity in these matters. By explicitly recognizing Bitcoin as property and obligations denominated in Bitcoin as monetary obligations, the law can ensure fairness, predictability, and stability for individuals, businesses, and institutions navigating the realm of digital property.