Whenever a regulator announces it will investigate or tax cryptocurrencies, most media outlets jump on the warnings wagon and report the action as a clampdown. For crypto enthusiasts in Poland, the nation’s financial regulator says don’t panic yet.
Contrary to reports in the mainstream media, the Polish legal system has no regulations prohibiting the activity of cryptocurrencies exchanges, says the country’s financial regulatory body, the Polish Financial Supervision Authority (KNF).
According to the KNF’s website, trading in crypto assets and trading venues themselves are not prohibited by law, and therefore its transactions are “legal on the territory of the Republic of Poland.”
Nevertheless, Poland has made localized attempts to regulate specific aspects of cryptocurrencies. While some of those instances are more concerning than others, none of it has officially banned the virtual asset class. Instead, the country has only taken a stance similar to other countries to regulate the nascent sector and to prevent its use for criminal activities.
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The KNF’s circular also noted the new laws to regulate Bitcoin and other cryptocurrencies which bring them in line with anti-money laundering and counter-terrorism financial legislation.
Poland’s tax and AML approach
The new Polish act, which takes effect on July 13, lists the entities subject to this regulation, which are referred to as “obligated institutions.” The list of these entities is long and does not explicitly refer to cryptocurrencies, but it appears that Bitcoin exchanges and other entities that facilitate the trade of digital coins as part of their main business can be regarded as obligated institutions.
What is clear though, the ban on initial coin offering (ICO) remains. In line with action taken in other jurisdictions, Poland’s authorities have recently launched a campaign to educate its citizens on the potential risks involved when it comes to cryptocurrency and margin trading.
The campaign also notes the lack of proper regulations in place which means that crypto assets are somewhat murky for investors to be kept safe, unlike strictly regulated traditional financial markets.
Earlier in May, Poland’s finance ministry published an update of the country’s tax code, stating that it will not tax income from transactions on cryptocurrencies. The MoF justified its taxing decision by stating that it considers conducting an in-depth analysis to better regulate the emerging industry.