Financial regulators in Poland have added two cryptocurrency startups to its register of payment providers despite their increasingly negative stance toward the virtual asset class.
In the registry section of its website, the Polish Financial Supervision Authority (KNF) has granted an operating licence to Coinquista and Bitclude. The two firms are providing crypto-related services including exchange platforms and digital wallets, though the license doesn’t explicitly state they are allowed to provide such products in the country.
Of note, Poland’s largest cryptocurrency exchange BitBay suspended operations in the country last year after banks refused to cooperate with the firm.
According to the KNF circular, the new license will allow Coinquista and Bitclude to provide a wide variety of payment services and solutions for Polish clients, including accepting cash deposits and withdrawals. It also allows the licensed startups to handle payment transactions, transfer funds, execute direct debits, as well as using payment cards and issuing payment instruments, among other relevant activities.
Ireneusz Pukin, CEO & founder of Coinquista, told Finance Mgnates that the inclusion of his company in the register of small payment institutions “proves that the cryptocurrency exchange can run legal business in Poland, and the Polish Financial Supervision Authority (KNF) is not an opponent of such forms of activity.”
He added: “I am all the more convinced that the supervision of the Polish Financial Supervision Authority will not only increase public trust in the crypto exchanges, but will also translate into the safety of their users.”
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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 sector and to prevent its use for criminal activities.
Poland’s tax and AML approach
The new Polish act, which took effect in July 2018, 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 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 2018, 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.