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• Key takeaways
• New rules on oversight
• Blocking of IP addresses and freezing assets
• Fees
• Other new regulations
• The entry into force of regulations
• Market reactions

Although the Regulation of the European Parliament and of the Council (EU) 2023/1114 of 31 May 2023 on crypto-assets markets (the MiCAR) was published in June 2023, the work on laws implementing it in Poland is still in progress.

The first version of the implementing act, the Act on Crypto-Assets, was published in February 2024. After the first set of public consultations, during which over 400 proposed amendments to the draft act were submitted, the legislators presented a new draft in August 2024 (the Draft Act) containing proposals accepted by the Minister of Finance (the MF).

We discussed the first version of the Draft Act in our eAlert published in March. Below, we discuss the amendments and the direction for the crypto market in Poland resulting from the publication of the new version of the Draft Act.

Key takeaways

• The "grandfathering period" that may be established under Art. 143(3) of the MiCAR for market players providing MiCAR services was set until 30 June 2025 (the version of the Draft Act from February provided a six-month longer deadline). Therefore, Polish VASPs would be required to obtain the CASP license by 30 June 2025. However, entities subject to the CASP license requirement and which are not VASPs (e.g., entities providing only asset management on crypto-assets) may provide their services until the decision from the regulator on their application license, subject to submitting a complete licensing application by 1 May 2025.
• The supervisory fee for CASPs remains at the same proposed level. The fees will amount to the average revenue from the provision of crypto-asset services in 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 increased, including by enhancing the means of protecting investor funds.

New rules on oversight

In the Draft Act, the supervisory powers of the Polish Financial Supervision Authority (KNF) have been increased concerning supervising participants in the crypto-assets markets. Among the most important changes, the following issues should be highlighted:

• The KNF is to approve, by way of a decision, a plan prepared by the issuer of asset-referenced tokens commonly used as a means of exchange for crypto-assets into money, specifying actions aimed at maintaining a certain threshold of value and volume of transactions (daily, on a quarterly basis).
• Specification of regulations governing the trading of shares issued by the issuer of asset-referenced tokens, as well as the supervisory competences of the KNF in this area.
• The KNF is to gain the authority to impose higher administrative fines than previously proposed. The Draft Act provides for administrative monetary penalties of up to over PLN 66,000,000 (approximately EUR 15,000,000).
• Monetary administrative penalties can also be imposed, in specific cases, on holders of crypto-assets (including natural persons).

Blocking of IP addresses and freezing assets

The Draft Act enhances the KNF's authority to block internet domains and freeze cryptocurrency accounts. The KNF will maintain a register of blocked domains, adding those where a crime related to crypto-assets is reported or the entity is on the KNF's public warning list.

The regulator can extend the freeze on cryptocurrency accounts for up to six months. Both service providers and account holders have the right to appeal the freeze.

Fees

During consultations on the Draft Act, market participants repeatedly drew attention to the level of fees that market participants would incur. The new draft did not introduce revolutionary changes regarding fees and even introduced new ones (amounts in euros will be subject to conversion to PLN):

• The fee of no more than EUR 4,500 for notifying activities on Polish territory by non-Polish CASPs and issuers of asset-referenced tokens will not be charged if the notifying entity's home country does not charge a fee for notifying its activities there (reciprocity).
• The fee for KNF approval of an updated informational document concerning asset- referenced tokens will be EUR 1,000.
• The fee for submitting to KNF an information document intended for users of crypto-assets or an information document for e-money tokens will be EUR 1,000.

Other new regulations

In the Draft Act, it was also proposed to:

• Regulate, at a national law level, the obligation to prepare a recovery plan, a redemption plan, and an orderly liquidation plan. These plans will be subject to approval by KNF.
• Grant authority to MF to issue a regulation governing the detailed scope of additional reporting obligations (imposed under the Accounting Act).
• Apply electronic correspondence as official communication in proceedings before KNF.
• Protect clients' funds accumulated in crypto-assets accounts.

The entry into force of regulations

We’re expecting that the Draft Act will be adopted in the Polish parliament in Q4 2024. Regarding transitional provisions it is worth noting:

• A three-month period (from when the Draft Act enters into force) during which Polish banks authorized to issue e-money will have to adjust their statutes in order to issue e-money tokens.
• Entities providing services in cryptocurrencies, which will be regulated services after the Draft Act comes into force, may provide services until 30 June 2025 at the latest (or until receiving a refusal to provide these services). After this date, service provision will be possible if entities have submitted an appropriate application for a permit by 1 May 2025.

Market reactions

During initial consultations, market participants repeatedly highlighted potential problems and difficulties posed by enacting this law. Some comments were accepted and implemented into the new Draft Act. However, entities from the crypto market continue raising concerns e.g. about excessively high annual supervisory fees. This will likely result in market consolidation and thinning of CASP market participants. Additionally, shortening the transition period has raised concerns about obtaining licenses by 30 June 2025. Nevertheless, upcoming months will be crucial for Poland's crypto-asset market future.

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