ON THIS PAGE
- Key takeaways
- New surveillance rules
- Blocking IP addresses and freezing assets
- Costs
- Other new regulations
- Entry into force of the regulation
- Market reactions
Although Regulation of the European Parliament and of the Council (EU) 2023/1114 of 31 May 2023 on markets in cryptoassets (the MiCAR) was published in June 2023, work on laws implementing it in Poland is still ongoing.
The first draft of the implementing law, the Cryptoassets Act, was published in February 2024. After the first round of public consultations, during which more than 400 proposed amendments to the draft law were submitted, legislators presented a new draft in August 2024 (the Draft Law) containing proposals accepted by the Minister of Finance (the MF).
We discussed the first version of the bill in our eAlert published in March. Below, we discuss the changes and direction of the cryptocurrency market in Poland resulting from the publication of the new version of the bill.
Key takeaways
- The “grandfathering period” that can be established under Article 143(3) of the MiCAR Act for market participants providing MiCAR services has been set until 30 June 2025 (the February version of the draft law provided for an additional six months). Therefore, Polish VASPs would be required to obtain the CASP license by 30 June 2025. However, entities subject to the CASP license requirement and that are not VASPs (e.g. entities providing only asset management on crypto assets) may provide their services until the regulator’s decision on their license application, subject to submitting a complete license application by 1 May 2025.
- The CASP monitoring fees remain at the same level as proposed. The fees will be the average of revenues from the provision of crypto-asset services over the last three financial years preceding the year for which the payment is due, at a rate of 0.5% of this average.
- The level of investor protection has been strengthened, in particular by improving the means of protecting investors’ funds.
New surveillance rules
The draft law provides for the expansion of the supervisory powers of the Polish Financial Supervision Authority (KNF) with regard to the supervision of participants in crypto-asset markets. Among the most important changes, the following points should be highlighted:
- The KNF must approve, by decision, a plan prepared by the issuer of tokens referenced to assets commonly used as a means of exchanging crypto-assets into currency, specifying the actions aimed at maintaining a certain threshold of value and volume of transactions (daily, on a quarterly basis).
- Specification of the rules governing trading in shares issued by the issuer of asset-referenced tokens, as well as the KNF’s supervisory powers in this area.
- The KNF will now be empowered to impose higher administrative fines than those previously proposed. The draft law provides for administrative monetary penalties of up to PLN 66,000,000 (approximately EUR 15,000,000).
- Administrative monetary penalties may also be imposed, in specific cases, on holders of crypto-assets (including natural persons).
Blocking IP addresses and freezing assets
The bill strengthens the KNF’s powers to block internet domains and freeze cryptocurrency accounts. The KNF will maintain a register of blocked domains, adding to it those for which a crypto-asset-related crime has been reported or the entity is on the KNF’s public warning list.
The regulator may extend the freezing of cryptocurrency accounts for up to six months. Service providers and account holders have the right to appeal the freeze.
Costs
During the consultations on the draft law, market participants repeatedly drew attention to the level of fees that market participants will have to bear. The new draft did not introduce any revolutionary changes in fees and even introduced new ones (amounts in euros can be converted into PLN):
- Fees not exceeding EUR 4,500 for notification of activities on the Polish territory by non-Polish CASPs and issuers of asset-referenced tokens will not be charged if the home country of the notifying entity does not charge fees for notification of its activities in that country (reciprocity).
- The fee for KNF approval of an updated disclosure document regarding asset-referenced tokens will be EUR 1,000.
- The fee for filing with KNF an information document for users of crypto-assets or an information document for electronic money tokens will amount to EUR 1,000.
Other new regulations
The bill also proposed to:
- Regulate, at the level of national law, the obligation to establish a recovery plan, a repayment plan and an orderly liquidation plan. These plans will be submitted to KNF for approval.
- Grant the MF the power to issue a regulation governing the detailed scope of the additional reporting obligations (imposed under the Accounting Act).
- Apply electronic correspondence as official communication in proceedings before the KNF.
- Protect customer funds accumulated in crypto-asset accounts.
Entry into force of the regulation
We expect the bill to be adopted by the Polish parliament in the fourth quarter of 2024. Regarding the transitional provisions, it should be noted:
- A period of three months (from the entry into force of the draft law) during which Polish banks authorized to issue electronic money will have to adapt their statutes in order to issue electronic money tokens.
- Entities providing cryptocurrency services, which will be regulated services after the entry into force of the bill, will be able to provide services until 30 June 2025 at the latest (or until they receive a refusal to provide such services). After this date, the provision of services will be possible if the entities have submitted an application for appropriate authorisation before 1 May 2025.
Market reactions
During the initial consultations, market participants repeatedly highlighted potential problems and difficulties with the enactment of this law. Some of the comments were accepted and incorporated into the new draft law. However, cryptocurrency market entities continue to raise concerns, for example regarding the excessively high annual supervisory fees. This will likely lead to market consolidation and a decrease in the number of CASP market participants. In addition, the shortened transition period has raised concerns about obtaining licenses by 30 June 2025. Nevertheless, the coming months will be crucial for the future of the Polish crypto-asset market.
(See source.)
