Lawmakers in Poland have approved a bill designed to regulate the country’s cryptocurrency market in accordance with the latest EU rules.
Critics say, however, that the legislation goes beyond European requirements, stirring controversy, not just in the crypto community, but in Polish politics as well.
Crypto act passed amid concerns over excessive regulation
The Sejm, the lower house of Polish parliament, has adopted a new law implementing the European Union’s Markets in Crypto Assets (MiCA) regulations in the EU member state.
The legislation, which has been in the making for quite some time, aims to impose order in Poland’s crypto space, arguably the largest in Central and Eastern Europe.
It has been criticized, however, for attempting to overregulate the nation’s crypto industry, stifling innovation and threatening to kill the business of domestic firms that work with digital assets.
On Friday, 230 members of the chamber voted in favor of the bill, another 196 rejected it, with no abstentions. The Crypto Assets Act will now go to the Senate, the upper house of parliament in Poland.
The government-sponsored law should ensure protection for customers and other market participants from what has been described as “dishonest entities,” the Polish PAP news agency reported.
It introduces criminal liability for certain violations such as provision of crypto services and issuance of digital tokens without authorization, and defines the obligations of approved platforms.
Its provisions stipulate that Poland’s Financial Supervision Authority (KNF) will be tasked to supervise the sector and equipped with the appropriate tools to conduct oversight.
The KNF will be responsible for registering violations of the new rules and fraudulent activities involving operations with cryptocurrencies.
Perpetrators of the most serious offences will face harsh penalties, including fines of up to 10 million Polish złoty ($120,000) and even imprisonment for up to two years.
The bill regulates online cryptocurrency exchanges, which will again be supervised by the KNF. They will be required to maintain individual client accounts, which should protect user funds, PAP detailed.
According to official data, released earlier this year, 18% of Poles have already invested in crypto assets, as previously reported by Cryptopolitan.
In July, Deputy Finance Minister of Poland Jurand Drop insisted the proposed regulations are crucial for strengthening investor protection. He also noted the lack of mechanisms to fight fraud, pointing out:
“20% of investors in this market declare they have been victims of some kind of fraud or abuse.”
Poland’s crypto law met with criticism and backlash
The long-awaited legislation was not accepted well by members of the country’s crypto community and the parliamentary opposition, who criticized it throughout its review in the Sejm.
While transposing MiCA into national law “sounds innocent,” the crypto act is a “real horror” for crypto entrepreneurs, the crypto news outlet Bitcoin.pl wrote in an article on Saturday.
Highlighting some of the powers granted to Poland’s financial regulator, which stirred the industry on the weekend, the Polish portal commented:
“The crypto assets law gives the KNF permissions that resemble a repression apparatus rather than market supervision.”
They come with “fees, which can simply finish smaller companies” and the “clear guidelines” are just restrictions and costly requirements that will suffocate innovation, the website elaborated, adding:
“This law can deal a fatal blow to domestic companies operating in the crypto sector.”
The exodus of Polish cryptocurrency firms may have already started, with XTB, one of the largest brokers in Poland, signaling it may seek a license in Cyprus.
Jakub Bartoszek, president of the crypto exchange service Cashify, emphasized that the Polish implementation of MiCA is one of the most extensive, imposing high entry costs and multiplies barriers.
The crypto entrepreneur expressed hope that Polish President Karol Nawrocki “will listen to the voice of the market and veto the law in its current form,” something the head of state has indicated he may do.
During debates in the Sejm, Bitcoin proponent and former presidential candidate Sławomir Mentzen also urged Nawrocki, who took office in August, to stop the bill.
