What's the deal?
Cryptocurrencies are based on blockchain network technology that enables the transfer of an indefinite number of crypto assets to an indefinite number of users without an intermediary. They are easy to manage, less prone to state regulations and decentralised, which makes them solely dependent on their users. Despite its financial attractiveness and growing popularity, this branch of the financial sector has remained unregulated. Cryptocurrencies were the subject of several warnings from supranational and national regulatory bodies, including the Polish Financial Supervision Authority (the "PFSA"), all highlighting the lack of adequate supervisory measures over cryptosystems and their potential for being exploited by money launderers.
New cryptocurrency regulations for Poland
The recent implementation of the AML V Directive into the Polish anti-money laundering regime will significantly impact how cryptocurrency business is conducted and how state authorities approach it. The main goal of the newly introduced instruments is to increase transparency and establish new forms of protection from suspicious transactions. The amendments apply to the providers offering exchange or intermediation in the exchange between virtual currencies and/or means of payment. They also apply to maintaining accounts, i.e. an electronically maintained set of identification data allowing authorised persons to use virtual currency units and make transactions.
"The main goal of the newly introduced instruments is to increase transparency and establish new forms of protection from suspicious transactions."
As of 31 October 2021, companies willing to provide such services need to register in the Register of Virtual Currencies (the "Register") maintained and supervised by the Polish Ministry of Finance. The Register is a part of amended KYC procedures. Non-compliance with registration obligations may result in administrative fines of up to PLN 100,000 (approx. EUR 22,000). However, the introduction of the Register is not connected with any effective controlling instrument over offered crypto products. It seems it would neither lessen the risk of potential money losses nor provide any kind of legal security for investors.
In multiple (probably most) cases, entities providing cryptocurrency services are also subject to the Polish Act on Payment Services and the registration obligations stipulated therein, as they may provide payment services connected with fiat currencies.
Furthermore, entry in the Register does not mean that the cryptocurrency business can actually begin, as most banks in Poland have so far refused to open and maintain a bank account for entities trading in cryptocurrencies.
The Regulation on Markets in Crypto Assets: is the best yet to come?
The insufficient regulation of cryptocurrency-related services may be inconvenient for customers, service providers and state authorities. That is why last year the EU Commission proposed the Regulation on Markets in Crypto Assets (MiCA), as part of a larger planned EU Digital Finance Strategy. The draft bill differentiates between crypto assets in the form of asset-referenced tokens, utility tokens and e-money tokens, and crypto assets generally. Entities dealing with cryptocurrencies may be classified as issuers of crypto assets and crypto asset service providers. They will be subject to consumer protection and safety standards. The MiCA also sets forth new obligations and requirements regarding providers of various crypto instruments. The exact date of entry into force is still uncertain, as the EU legislative procedures are still pending.