Cryptocurrency Regulation in Poland

Whereas virtual currencies have recently gained extreme popularity, with Bitcoin ATMs being the physical manifestations of such a phenomenon, Poland has become the jurisdiction which regulates and supervises crypto businesses (mining, sales, and purchase of crypto assets) via its national authorities.

Generally, the Polish financial market is supervised by the Polish Financial Supervision Authority that is responsible for effective functioning and development of the market, as well as participates in the preparations of the draft legal acts created for the purpose of the financial market supervision.

Cryptocurrency businesses are now an independently regulated space, overseen by the Tax Administration Chamber who maintain a registry of crypto activities, called the Register of Virtual Currencies.

Crypto companies operating within Poland are supported with the following initiatives:

• The Blockchain and New Technologies Chamber of Commerce takes up the interest of the industry pursuant to the applicable law of Poland.
• The Innovation Hub, whereby the supervisory authority consults the Fintech companies and provides virtual sandboxes to support the development of new Fintech startups.

Anti-Money Laundering and Counter-Terrorist Financing Law

The main legal act fighting against money laundering and terrorist financing in Polish cryptocurrency and other financial markets is the Act of March 1, 2018 on Counteracting Money Laundering and Financing of Terrorism the Polish AML Act. It is one of the first pieces of legislation where Poland has defined the AML specific term of “virtual currencies” and their regulation in the country. It sets out basic AML requirements for VC institutions engaged in the following activities:

The General Inspector of Financial Information is the topmost leader in the Polish anti-money laundering and counter-terrorist financing system. Transparency should be enhanced, as well as protection from suspicious transactions.

Virtual currency companies are to apply the following actions accordingly:

• Publicly identifying the management of the company, which is responsible for performing duties under the Polish AML Act
• Application of internal AML procedures to deal with money laundering and terrorist financing
• Incorporation of KYC procedures elaborated for client identification and verification, and for estimating the level of risk associated with the clients
• Filing reports with the General Inspector of Financial Information
• Elaboration and provision of training programs with regard to the staff that carries out AML procedures

Competition and Consumer Protection

Under Polish law, specific rules for cryptocurrency consumer protection have not been developed yet. Still, the Consumer Rights Act of 30 May 2014 regulates economic activities of businesses that conclude contracts with consumers regardless of the means of transactions, which makes it applicable to the virtual currencies. As every other business actor, the entrepreneur using cryptocurrencies has to comply with the Consumer Rights Act when closing the contract with consumers, for instance, the right to withdraw from a contract in cases provided by the Consumer Rights Act.

Considering virtual currencies are not qualified as e-money, being, respectively considered a payment service, for as long as virtual currencies are not qualified as a form of e-money, their flow is not subject to the Act on Payment Services.

In Poland, no special competition regulation has been enacted concerning cryptocurrencies, but generally, the provisions of the Act on the Protection of Competition and Consumers of 16 February 2007 apply. It addresses the following tasks:

• Regulation of promoting and protection of competition
• Protection of interests of entrepreneurs and consumers in the public interest
• Prevention of anticompetitive practices
• Prevention of practices infringing collective consumer interests
• Protection from application of wrongful provisions of model forms of contracts
• Protection from anticompetitive concentrations and combination of entrepreneurs

Benefits

New Crypto Regulations in the EU

The regulation of cryptocurrency is forging ahead within the EU, to which Poland belongs. For that reason, besides Polish law, it is important to take into consideration the most developing European legal framework, which is being built with the purpose of regulating cryptocurrency businesses operating either in or from the EU.

At the moment, the European Commission is working on new KYC requirements for crypto businesses. These requirements are going to prohibit virtual currency businesses from trading with unhosted wallets without identifying in advance who their owner is. The Commission has come forward with the proposal of abolishing the existing limit of 1,000 EUR which means all crypto transfers will fall under the radar of KYC processes soon.

The Register of Virtual Currencies

Under the currently applicable legal regulations, a company willing to conduct an activity in connection with cryptocurrencies on the territory of Poland is required to enter the Register of Virtual Currencies, maintained by the Tax Administration Chamber.

Business persons conducting the following activities are under obligation to enter the Register:

• Exchange of virtual currencies for fiat money
• Exchange of virtual currency for another
• Accounts provisioning and maintenance of virtual currencies – wallets
• Intermediation in Virtual Currencies Exchange

This will also define the kind of license that the virtual currencies firm should apply for. A firm can be issued one or all of the applicable licenses.

The Register is part of amended Know Your Customer procedures. Any company that does not register before the commencement of its crypto activities may be subject to a fine in the amount of 100,000 PLN (approx. 21,646 EUR). Crypto companies, prior to undergoing the relevant crypto-authorization procedure, will have to be sure that they meet certain legal requirements.

Virtual Currencies Company: Requirements

The process of creating a company in the cryptocurrency business in Poland is no different than any other setup. The most popular crypto company type in Poland is the Limited Liability Company, Sp z.o.o, which can be established by one or more shareholders who may all be foreign non-resident shareholders of Poland and none of whom are required to hire a local director. Depending on the documentation provided and procedures, the actual process of registering a new company in Poland takes several weeks of time.

Key steps to opening a new Limited Liability Company in Poland:

• Prepare a unique name for your company in the registry
• Drafting a power of attorney, in case of remote registration
• Obtaining the apostille-attached notarised photocopy of the director/founder of the company’s passport;
• Deed of Formation-foundational documents for a Limited Liability Company must be prepared and signed in front of the Polish notary.
• Registration of local office premises is a must, which may be proved by the lease agreement, and virtual office might become an option, too.
• Opening a corporate bank account in Poland;
• Transferring the authorized capital into the new account – the minimum of which is 5 000 PLN ≈1,084 EUR subject to a 0,5% Civil Transaction Tax;
• Obtaining a REGON (statistical) number;
• Obtaining a NIP (tax identification) number;
• Application for a VAT number;
• Application for the registration of the company with KRS; it will require such information as REGON number, NIP number, and the application for the company’s registration with the Social Insurance Institution. The registration fee is 500 PLN (approx. 108 EUR), and the consideration may take up to 7 days.
• Appointment of the Management Board of the company.

Also, it is necessary to prove, before registration with the Register of Virtual Currencies, that the crypto company developed a transparent and stable scheme of activities.

Requirements specific to a virtual currencies company:

• A business plan should contain documentation regarding hardware and software used in crypto business activities.
• Internal processes of AML/KYC standards compliance and risk control should be implemented.
• Hiring an AML officer who has to be neither a Polish citizen nor a resident of Poland.
• Having relevant professional experience is a prerequisite.

It’s important to note that all of these documents must be submitted in Polish, which means that non-Polish speakers and non-Polish document owners will need the services of a sworn translator.

Many obligations related to the governance of an enterprise in Poland can currently be carried out online. The managers of an enterprise may apply – if they so wish – for a PESEL, if they are foreigners, and then create a so-called ‘Trusted Profile’ that will enable electronic signing of applications with the consequence of having access to online services for entrepreneurs.

Company directors and founders have to meet the following requirements:

No criminal record – the police authorities must issue a certificate stating that the administrators and founders never had been sentenced for a crime or tax offense against public administration entities, regional entities and local municipalities, the administration of justice, the authenticity of documents, property, economic turnover, and property rights in civil law transactions, money and securities trading, or any offense committed for material or personal gain or an intentional fiscal offense.

Demonstrated professional and/or academic experience in finance. The administrators and founders will need to prove at least one year of experience in the virtual currencies business. In case this is not possible, they will have to attend a program covering legal and practical issues in Virtual Currencies Businesses.

Registration with the Register of Virtual Currencies

Prior to conducting its activity in Poland, any crypto entity shall go through the crypto-authorization procedure of registration in the Register of Virtual Currencies.

Applications shall be submitted only in electronic form through the Electronic Platform of Public Administration Services (ePUAP). It must be consonant with the factual status and include all attachments provided for by law. If all the criteria are met, the Tax Administration Chamber shall enter the company in the Register of Virtual Currencies within 14 days from the date of receipt of the application. In case any errors are found, an application can be filed for correction, but this may delay the process of consideration.

The Polish regulator has not confirmed periodic fees concerning supervision relative to virtual currencies companies in Poland.

The main stages of the application process are as follows:

• Receipt of the application for registration in the Register
• Checking the application
• Registration in the Register or a decision on refusing registration in the Register

Applicant journey – Key steps:

1. Preparation of the declaration of compliance with the conditions provided for by law to undertake the activities in the field of virtual currencies
2. Preparation of the declaration of no criminal record
3. Filling in the ePUAP application form
4. Stamp duty in the amount of 616 PLN, approximately 133 EUR, at the time of filing the application – confirmation of such payment must be attached to the application form
   • Entreprise des payments dans le compte bancaire de la mairie de Katowice : PKO BP SA no. 52 1020 2313 2672 0211 1111 1111 – avec la mention “fee for entry in the register of activities in the field of virtual currencies”
5. The applicant may also apply for a virtual certificate of an entry into the Virtual Currencies Register, which is issued within 7 days from the day of granting the entry; this document has to be paid for on the day of submitting the application; the stamp duty amounts to 17 PLN (approximately 4 EUR).

It is not possible to appeal against the refusal of entry into the Virtual Currency Register; however, it is possible to submit another application in order to reconsider the case. Such an application shall be submitted to the Director of the Katowice Tax Chamber by electronic means using the ePUAP platform, or by post to the following address: ul. Paderewskiego 32b, 40-282 Katowice.

Reporting Requirements

All types of entities registered in Poland have the annual report obligation, which corresponds to the auditing duty. Annual financial statements and annual declarations of income tax are to be filed with the e-Tax Office. In addition, the cryptocurrency operators are obliged to submit AML reports to the General Inspector of Financial Information. The VAT reporting is filled either on a monthly or quarterly basis.

A certified audit, on the other hand, is required only if a Limited Liability Company meets at least two of the following conditions: annual net revenue exceeds 5 mill. EUR, annual turnover exceeds 2,5 mill. EUR, annual employment is 50 or more full-time employees.

Crypto regulation in Poland

Taxation of Virtual Currencies Companies

There is no crypto-specific tax, but cryptocurrency companies operating in Poland, depending on their legal structure, are subject to paying a variety of already existing taxes which in certain cases might be spared, in view of the fact that Poland has agreements on the avoidance of double taxation with over 80 countries.

The most common taxes which may be applicable to a Limited Liability Company in Poland include Corporate Income Tax, Personal Income Tax, VAT, Stamp Duty, Real Estate Tax, and Excise Duty. Also, just like any other employer, a virtual currencies company, if employing individuals, will be obliged to pay Social Insurance and Health Insurance contributions to the Polish government.

Standard tax rates in Poland

The following aspects may be considered with regard to the payment of Corporate Income Tax in Poland:

• Revenues from the exchange of virtual currency against legal tender, goods, services or property rights other than this virtual currency, or from the payment of other liabilities with this virtual currency, shall be considered revenues from capital gains.
• The value of virtual currency acquired in exchange for any other virtual currency will not be treated as income.
• As in the case of incomes, expenses related to and incurred in respect of such an exchange of virtual currency for another virtual currency shall not be regarded as cost of earning revenue.
• Income from the transfer of virtual currencies is the difference attained in a given tax year between the total revenues earned from the transfer of virtual currencies against consideration and the revenue earning costs.
• Residence certificate obtained from the taxpayer documents the location of seat of the taxpayer for tax purposes in order to claim the preferential tax rate or tax exemption under a relevant double tax agreement.
• At the end of the tax year, which coincides with the calendar year, a statement shall be made by the taxpayer regarding the income obtained in that tax year from the transfer of virtual currencies and determination of the quota of income tax corresponding.

Key aspect to note when registering as a VAT taxpayer:

• EU law does indeed exempt from VAT the services of providing cryptocurrencies for traditional currencies and vice versa, and
• Other goods and services are subject to VAT.

Suspending Virtual Currencies Activities

If there is a temporary halt in the activity of a virtual currency, the entrepreneur may file a motion for removal from the Register of Virtual Currencies. The application is not subject to stamp duties. Messages on the removal of files from the Register of Virtual Currencies should be published in the Register within 14 days from the date when the decision becomes final.

The duty of notification about the fact of the suspension of virtual currency activity is mandatory. The notification of the suspension of activity within the field of virtual currencies is to be provided with an electronic form by means of the ePuap. It shall be submitted within 14 days from the date of suspension of the activity. With the notification, the firm needs to give the date from which it ceased to operate an enterprise, being that date not earlier than the date of entry in the register and not being in the future.

The occasions allowed for the removal of a company by the responsible authorities from the Register of Virtual Currencies are as follows:

• Within two months from the day of being informed about the removal of the company from the Central Register and Information on Economic Activity or the National Court Register;
• When a company does not comply with the statutory conditions for conducting virtual currencies activities;
• In a case when a company contradicts factual status.

Poland

Capital	Population	Currency	GDP
Warsaw	38,036,118	PLN	$19,023

Crypto Regulation in Poland 2024

In spite of such popularity and an avalanche of consequent regulatory problems, Poland remains a pretty relaxed jurisdiction for crypto businesses since crypto-specific regulatory developments are gradually emerging at the national level, mostly because of the EU regulatory framework applicable across its member states.

New EU Rules Applicable to Poland

2024, and MiCA is in – Markets in Crypto-Assets – meaning ‘fully in effect’. That means CASPs, or Crypto Asset Service Providers, throughout Europe-yes, that includes Poland-are following newly set regulations.

Here is the scoop:

In turn, these regulations prepare such a great storm in the Polish crypto environment, and not only, at the end of 2024. The rules may be complex, but they are to provide the crypto market that will be more stable, transparent, and ecology-friendly.

Regulatory Sandbox and Support

Regulatory Sandbox: This is a sandbox introduced by the EU in March 2023. It provides a legal regime for trading and settlement of transactions in cryptoassets that fall within the definition of financial instruments under MiFID 2. It could also be thought of as a ‘safe space’ for testing new technology and building an evidence base for a possible permanent regime. It is due for review in 2026, where the innovative spirit will meet its regulatory counterpart.

ESMA Guidelines: In parallel, ESMA consults on draft guidelines. Their aim is to develop standard forms and templates for DLT applications, which would help them in their implementation via Q&A.

National Support for Polish Crypto Companies:

• KNF’s Innovation Hub – the Polish supervisory authority offers consultations and virtual sandboxes to support fintech companies in developing new technologies.
• The Blockchain and New Technologies Chamber of Commerce -this organization represents the industry’s interests under Polish law.

So, crypto innovation is in full swing under watchful eyes and supporting frameworks, which makes 2024 dynamic for digital assets both for Poland and the EU.

Poland Crypto License in 2024

Poland still has not introduced any comprehensive crypto licensing process, including determining the license and supervision fees. Instead, the Polish crypto authorisations are still issued by the Tax Administration Chamber and, as such, provide for a sort of cryptocurrency license.

Crypto Authorization Requirements:In the case that one is about to enter the crypto market of Poland, then inclusion in the Register of Virtual Currencies would be required, hence compliance with AML/KYC procedures.

Services Provided by Authorized Crypto Businesses:

• Exchanging of fiat currencies with cryptocurrencies.
• Exchange of different cryptocurrencies.
• Crypto exchange brokerage.
• Providing and maintaining cryptocurrency wallets.

Application Process:Cryptocurrency authorization applications can be submitted online via ePUAP (Electronic Platform of Public Administration Services). Applications must not have any errors or omissions for it not to delay the process. If your application is correct, and there are no reasons for refusal, authorization is granted within 14 days of receipt.