Cryptocurrencies in Poland

Cryptocurrencies in Poland
Michał Gawlak

Michał Gawlak

Partner / Attorney-at-law

Cryptocurrencies still constitute a young but dynamically developing market in Poland. Due to the increased interest in virtual currencies the number of crypto frauds is also on the rise. Therefore, the cryptocurrency market gradually becomes the subject of new legal regulations at the national, EU and international levels. Their primary goal is to ensure financial security. Below we discuss the most current requirements related to business activities in the field of cryptocurrencies in Poland. Polish legislature has decided to implement a chapter in the Act on Counteracting Money Laundering and Terrorist Financing (‘the AML Act’) including regulations concerning business activities in the field of virtual currencies. We explain the introduced changes and resulting responsibilities for entities conducting business activities with regard to cryptocurrencies in Poland.

Amendments to the AML Act

The amendment to the AML Act entered into force on the 15th of May 2021. It aimed at implementing into the Polish legal system the solutions included in the Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018, amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU. The introduced changes mainly concern the cryptocurrency market in Poland.

Register of Virtual Currencies – what is it and what do you need to know?

Since 31st October 2021, business activity in the field of virtual currencies constitutes a regulated activity as defined in regulations of the Act of 6th March 2018 Entrepreneurs’ Law. This means that it can be performed only after obtaining an entry in the virtual currency business register. The register is maintained by the Director of the Chamber of Tax Administration in Katowice. Its establishment aims to contribute to the increase of the transparency of the cryptocurrency market in Poland.

The creation of the virtual currency business register does not stem from the initiative of the Polish legislature. It results from the necessity to implement the recommendation of the Financial Action Task Force („FATF”) in the field of virtual assets. FATF has concluded that the activities of the entities providing services related to virtual assets should be licensed or, at least, registered. Hence, the Polish legislature has adopted a less formalized type of regulation.

Cryptocurrencies in Poland – which entities are obliged to obtain an entry into the cryptocurrency business register?

New regulations do not apply to every entrepreneur whose business activity operates within the field of cryptocurrencies. They mainly relate to entities specified in point 12 of Article 2 of the AML Act. The regulations identify entrepreneurs who conduct business activities in the field of virtual currencies that are related to:

  • exchange between virtual currencies and means of payment,
  • exchange between virtual currencies,
  • intermediation in the aforementioned exchange,
  • operating and maintaining virtual currency accounts.

This means that under the AML Act, ‘activity in the scope of virtual currencies’ constitutes a more narrow concept than in a common understanding.

Reputation, knowledge, experience – new requirements for entrepreneurs

Currently, economic activity in the scope of cryptocurrencies in Poland may be conducted exclusively by entities who have a rightful reputation as well as knowledge or experience specified in regulations. The aim of this solution is to provide a sufficient level of protection against using this kind of activity for criminal purposes.

The proper reputation of the entity may be considered in cases when the entrepreneur was not convicted for crimes indicated in 129 Article of the AML Act. This provision includes, among others, intentional crimes against the activity of state institutions and local government, against the administration of justice, and against the credibility of documents or money trading. The discussed requirement – depending on the legal form of business activity – concerns natural persons, management board members of corporations and shareholders in partnerships who are authorised to represent or conduct business operations. What is important, the requirement of no criminal record also applies to those who hold managerial positions connected with business activity in the scope of cryptocurrencies as well as actual beneficiaries of the entities conducting such activity.

When can it be concluded that an entrepreneur has the relevant knowledge or experience? After fulfilling at least one of the premises specified in 129 Article of the AML Act. These include:

  • completing training or course that covers legal or practical issues related to virtual currency activities or
  • performing for a period of at least one year activities related to virtual currencies.

Fulfilment of the abovementioned conditions has to be proved with appropriate supporting documents.

When one should submit a request for entry into the virtual currency business register?

Economic entities that are about to start conducting cryptocurrency activities are required to obtain the relevant registration before the actual beginning. Those entrepreneurs who conducted such activities before 31st October 2021 should take care of the relevant entry no later than 30th April 2022.

How to apply for entry into Cryptocurrency Business Register?

The application for entry into Cryptocurrency Business Register should be submitted to the Director of the Chamber of Tax Administration in Katowice. This can be done exclusively in electronic form via the ePUAP government services platform. The authority should proceed with entry into the register within 14 days from the moment of submitting the complete application together with all the required statements.

Submitting the application is associated with the necessity to pay fees. These include the amount of 616 PLN for entry into the Cryptocurrency Business Register and 17 PLN for issuing a certificate of the entry into Cryptocurrency Business Register.

Cryptocurrencies  in Poland – the consequences of not being registered into the virtual currency register

Entrepreneurs and companies who will fail to comply with the registration obligation will have to face consequences in the form of penalty payment. In accordance with Article 153b of the AML Act, an economic entity operating within the scope of virtual currencies without obtaining the required entry into the register is subject to a fine of up to 100 000 PLN. However, one should remember that this is not the only possible penalty that threatens the entities that conduct business activity in the field of virtual currencies. All such economic entities constitute, in fact, obliged institutions in accordance with the AML Act. It means that the Act imposes on them not only numerous obligations but also sanctions for non-compliance.

Summary

The virtual currencies market is constantly growing. It’s not surprising as it creates many opportunities. On the other hand, it simultaneously carries some risks to financial security. Therefore, legislators of many countries, including Poland, pay more and more attention to it. The aim of creating a register of cryptocurrencies in Poland and identifying business activities in this field as regulated is to reduce the risk of money laundering and financing of terrorism. In order to avoid negative consequences, entrepreneurs should adapt to current regulations and closely monitor changes.

Do you consider registration of a company in Poland operating in the field of cryptocurrencies? Do you already conduct such business and want to make sure that you fulfil all the obligations required by law? Please contact our specialists, who have many years of experience in counselling in the cryptocurrency market.

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Michał Gawlak

Partner / Attorney-at-law
Accounting