Polish Sejm upholded controversial law on crypto assets

• Poland has passed a crypto law with fines for market participants of up to $120,000 and two years in prison for violating it.
• The community called the new rules “death for small businesses”.
• In addition, the regulator now has the right to block suspicious crypto service domains.

Poland’s lower house of parliament, the Sejm, has passed a bill on crypto assets that implements EU rules (MiCA). However, it has drawn sharp criticism from industry participants. The document is now to be considered by the Senate, after which it will be submitted to the president for signature.

The law provides for a significant expansion of the powers of the Polish Financial Supervision Commission (KNF), which gets the right to issue licenses to crypto asset service providers (CASPs), control the issuance of tokens, block suspicious domains, and impose millions of dollars in fines.

The KNF will also monitor exchanges, which are now required to keep clients’ funds separate from their own.

The most serious violations will be punishable by fines of up to PLN 10 million (approximately $120,000) or even imprisonment for up to two years. The punishable acts include operating without a license, issuing tokens without an approved information document, or violating reporting obligations.

Delphine Forma, Head of European Policy at Solidus Labs, noted in a commentary for Incrypted that the adoption of the law was an important step for the Polish market:

However, industry representatives warn that only large players can survive in such conditions in Poland, while startups and small companies will be forced to leave the market.

The crypto community also talks about excessive “gold plating” — when national regulators add additional requirements to European regulations. In particular, a crypto analyst under the pseudonym Świat Krypto wrote in X:

At the same time, the law’s supporters insist that the document is a step towards regulating the market and protecting investors. The explanatory note notes that the goal is “to implement the tasks set out in EU Regulation 2023/1114 in the area of effective supervision and investor protection.”

In this regard, Robert Nogacki, an attorney and founder of Kancelarii Prawnej Skarbiec, considers the adopted law to be necessary. In his opinion, this is “a turning point and the end of the Wild West era in the crypto world, where activities were often conducted without proper supervision.”

According to him, the adopted rules are “a belated but necessary response to years of abuse, as innovation cannot be an excuse for avoiding basic consumer protection standards”.

Meanwhile, the Polish authorities noted that the new rules will ensure the long-term development of the market and increase security through expanded supervisory powers.

The country has recently launched the first bitcoin ETF trading on the Warsaw Stock Exchange.