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Recent developments in the regulation of cryptocurrency exchanges and cryptocurrency trading in Poland

Cryptocurrency exchanges and the cryptocurrency trading market have generally been unregulated so far in Poland. There are no pending legislative proposals aimed specifically at curbing cryptocurrency trading; however, upcoming new anti-money laundering legislation and recent steps taken by the Polish Financial Supervision Authority (the PFSA) may adversely affect the Polish cryptocurrency market.

The new act on Counteracting Money-Laundering and the Financing of Terrorism was adopted on 1 March 2018 (the AML Act), the key part of which will enter into force in July 2018. The AML Act implements the 4th AML Directive in Poland. It  will apply to new categories of obliged entities, ie those which, as part of their business, render services consisting of: (i) exchanging cryptocurrencies (referred to in the act as “virtual currencies”) for legal tenders and vice versa; (ii) exchanging one cryptocurrency into another cryptocurrency; (iii) intermediation in providing the services referred to in points (i) and (ii) above; and (iv) maintaining the accounts which enable cryptocurrencies to be kept and executing related exchange transactions.

Under the new AML Act, the definition of virtual currency is very broad. A virtual currency is defined as a digital mirroring of a value, other than legal tender, international account unit, electronic money, financial instrument, promissory note or cheque, which: (i) is exchangeable  for legal tender; (ii) can be accepted as a payment; and (iii) is capable of being electronically kept or transferred, or can be electronically traded. The most popular cryptocurrencies will qualify as virtual currencies under the AML Act, which means that all professional entities involved in operations concerning the cryptocurrency market will be subject to strict AML requirements such as the KYC regime, keeping records and applying internal AML procedures.

The Polish authorities also seem to be increasingly sceptical about cryptocurrencies. In December 2017, the PFSA and the National Bank of Poland launched a joint information campaign concerning the risks of investing in cryptocurrencies. In February 2018, the largest cryptocurrency exchange in Poland, which is also one of the largest in Europe, was included on the public list of warnings maintained by the PFSA. In the latter case, the PFSA also notified the prosecutor of its suspicion that the exchange had allegedly provided illegal payment services. In addition, recent public statements issued by high-ranking Polish officials suggest that work on regulations targeting the cryptocurrency market may soon be on the rise.

Further information

This article is part of the Allen & Overy Legal & Regulatory Risk Note, a quarterly publication.  For more information please contact Karen Birch – karen.birch@allenovery.com, or tel +44 20 3088 3710.

Legal and Regulatory Risk Note
Europe