New Crypto Law: Fake Security, Threatened Innovation
On Friday, the Sejm passed the Act on the crypto-assets market and online currency exchange offices, the main purpose of which was to implement the EU regulation MicaIt was intended to regulate the market, increase investor security, and create predictable operating rules for companies. Unfortunately, the adopted regulations go far beyond the framework set by the European Union and—rather than strengthening the market—may lead to its weakening and a massive outflow of innovation from Poland.
"From the outset, we have called for MiCA to be implemented in a proportionate and competitive manner. Poland had the opportunity to adopt regulations consistent with the spirit of the regulation: protecting investors while simultaneously enabling the development of innovation and attracting capital. However, the adopted law adds further barriers – introducing extensive licensing procedures, very high sanctions, and broad supervisory powers for the regulator. This is a step towards overregulation instead of market order." - he comments Sławek Zawadzki, Co-CEO of Kanga Exchange.
New law: more bureaucracy and risk for entrepreneurs
According to the Act, supervision over the crypto-assets market will include Polish Financial Supervision AuthorityThe Polish Financial Supervision Authority (KNF) will be empowered, among other things, to block companies' activities by entering them into the register of fraudulent domains without immediate, effective appeal. Operating without a license or issuing tokens carries penalties of up to PLN 10 million and up to two years in prison. This is compounded by hundreds of pages of licensing requirements and regulations, while in many EU countries the registration process is much simpler.
"Regulations should build trust and security for users, but they must not simultaneously deter entrepreneurs and investors. Such far-reaching requirements could lead to Polish companies relocating abroad, and global players merely "passporting" licenses from other countries without actually having a presence in Poland. As a result, we will lose jobs, taxes, and know-how, and investors will use foreign, often less supervised platforms." – warns Zawadzki.
Customer Safety: The Paradox of Restrictive Regulation
The stated goal of the law is to strengthen customer protection. However, overcomplicating procedures and increasing operating costs could have the opposite effect. Users, discouraged by limited offerings from domestic companies or higher costs, will begin using foreign services over which Polish regulators have no real control.
"Instead of building a market where Polish investors can operate safely and legally, we risk transferring it to less transparent, foreign entities. This will not increase security – quite the opposite." – emphasizes Zawadzki.
A missed opportunity for a European innovation hub
Poland has one of the most dynamically developing crypto markets in the region, an extensive network of on-ramp and off-ramp points (places facilitating the transition between cash and kryptowalutami), as well as a large user community – according to research, up to 18% of Poles have already had contact with cryptoassets. Friendly, predictable legislation could strengthen this advantage and attract international players.
"We have the potential to be a major blockchain technology hub in Europe. Unfortunately, the regulations passed increase the uncertainty and risk of operating in Poland. If we want to develop a modern digital economy, we need regulations that not only protect investors but also encourage innovators to build their businesses here." – says Zawadzki.
Dialogue instead of a chilling effect
For many months, the industry has been calling for dialogue and support in creating regulations that will, on the one hand, provide investors with security and, on the other, enable the development of modern financial services. Meanwhile, the adopted law may trigger a so-called "chilling effect" – instead of attracting capital and development, it will discourage entrepreneurs from doing business in Poland.
Author: Kanga Exchange