Crypto License in Poland

The following activities are acknowledged as crypto activities in Poland.

Asset Exchange

Services providing possibility of interchanging virtual assets or purchase of virtual assets with fiat currencies from the service provider is categorized under this activity. Usually, the service provider offers a list of assets that is accepted by them, and only allows exchanges to be done between them and their customer. The customers can exchange one type of virtual asset to another or purchase the virtual asset with depositing fiat currency to the account of the service provider. Companies that offer asset exchange services may or may not allow transfers to the third parties, meaning the virtual assets acquired by the customers cannot be used as a tool to transfer value to third parties and the acquired virtual assets can be only used by them for investment purposes.

Asset Transfers

If a service provider allows exchange of virtual assets between third parties, their activity will be categorized as an asset transfer. Asset transfer services allows their customers to use the virtual assets to be used as a means of payment or transfer of value. The company may be a close circuit service provider, where only internally purchased virtual assets can be transferred between third parties, or it can be an open circuit and allow movement of funds acquired from third parties. In both cases, the service provider becomes subject to Financial Market Supervision and Payment Services Act and obtains further obligations at top of existing obligations for being an obliged entity under the Act on Counteracting Money Laundering and Terrorist Financing.

Marketplaces, Intermediary Services for Sale or Trade

Any intermediary service facilitates exchange, trade or transfer of virtual assets are categorized under this activity. In order to be an intermediary, a company must offer a service which allows execution of financial operations by the will of its customers which does not require their involvement. Usually, the assets in circulation are not under the possession of the company that is offering these services. This means that the company provide a marketplace that facilitates the exchange between crypto to crypto, fiat, or any other asset between third-parties.

Custodian Wallet Service

Custodian Wallet Service is the practice of safe keeping and the virtual assets of a customer in a corporate owned electronic storage system. This service is usually given directly by the service provider or through a third-party solution provider which provides infrastructure for the service. As a general practice, usually, the private key of the wallet is held securely by the service provider and only the public key is given to the customer. The customers of the service providers would require their assistance for the execution of transfers to third-parties, which can be done through direct requests, phone applications, or widgets provided.

The European Union will actively tighten the rules regarding regulating CASPs (cryptoasset providers). The MiCA law has been adopted by the European Parliament since 2022. MiCA is a regulatory framework developed by the European Commission to regulate crypto-asset markets and crypto-related services that do not currently fall under the scope of EU regulation.

It has been in place since 2018 and aims to provide a single licensing regime for all EU member states to harmonize the regulation of cryptocurrency creation and trading in line with the European Digital Finance Strategy. The law establishes a pan-European framework for conducting cryptoasset business and covers all virtual currencies, including cryptocurrencies. The new regulation is designed to protect investors, mitigate risks, and combat financial fraud. It also obliges service providers to comply with certain security standards and obey the rules set by regulators in the European Union.

Key objectives:

• Providing legal certainty for cryptoassets not regulated under current EU financial services legislation. There is a clear need for this at the moment.
• Establishing uniform rules for cryptoasset-related service providers at the level of European Union legislation. This will help avoid inequality and chaos in this area.
• Replacing the existing national framework applicable to crypto assets that do not fall under the regulation of the current EU financial services legislation. A single regulatory approach will help avoid fragmentation and conflicts between national rules.
• Establishing special rules for “stablecoins” and e-money. This will ensure consumer and investor protection and support the stability of financial markets.

Key requirements for CASPs:

• Regulatory Compliance: Companies must comply with all applicable laws and regulations, including those relating to anti-money laundering and counter-terrorist financing.
• KYC (Know Your Customer): CASPs must conduct customer identification procedures and collect customer information by applicable regulatory requirements.

• AML (Anti-Money Laundering): establish and maintain systems and procedures to detect and prevent transactions related to money laundering and terrorist financing.
• Monitoring systems: companies should have monitoring systems in place to identify and track suspicious transactions and activities.
• Security: ensure a high level of security in the storage and transfer of virtual assets, using modern technology and security methods.
• Regular audits: companies should conduct regular audits of their systems and procedures to ensure their effectiveness and compliance with applicable requirements.
• Cooperation with regulators: CASPs must cooperate with regulators and provide them with necessary information and documentation upon request.

MiCA will apply in all European Union (EU) member states, so if you plan to operate in Poland or elsewhere in the European Union, you should consider the new rules to operate legally.

Poland is preparing to introduce a new regulatory framework for digital assets in 2024, integrating the The Markets in Crypto-Assets Regulation (MiCA). The government has announced that the bill will be presented to Parliament in the second quarter of the year, giving the Polish Financial Supervision Authority (KNF) expanded powers.

The KNF now licenses virtual asset service providers (VASPs) and will continue to do so, but with additional powers similar to those held by BaFin in Germany and the FCA in the UK. The new bill will allow the KNF to supervise cryptocurrencies, take action against non-compliant VASPs, impose fines, and take violators to court.

Polish Virtual Asset Service Providers (VASPs) will need to prioritize user privacy and data protection, opting for smart contracts over traditional paper documentation. These actions are geared towards aligning with MiCA integration, which is set to enhance oversight of the crypto market and bolster investor protection measures.

Thus, the introduction of new rules will create a legal framework for the efficient functioning of crypto-asset markets and strengthen the KNF’s role in investor protection.

Just like the legal landscape surrounding virtual assets in Poland, the taxation scheme is also beneficial for businesses that wish to introduce themselves to this sector. The Polish Legal System does not consider virtual assets as a currency unit or a payment instrument, the profits from virtual assets are either classified under personal income tax (as income from cash capital) or as profits from business activities (as capital gains). In both cases a progressive tax scheme is available, while the private persons benefit from a rate between %18-%32, the businesses benefit from the rate of 15% or 19% depending on their size.

As of March 2023, Polish Companies are liable for paying the following tax rates:

• Corporate Income Taxes (CIT) – 19%;
• Taxes on profits (BT) – 19%;
• Capital Gains Taxes (WCL) – 19%;
• Value Added Tax (VAT) – the basic rate of 23%;
• Social Security (SVP) – 19.48% to 22.14% (of gross salary);
• Health insurance (SA) – 9%.

What to look out for for legitimate activities within Polish taxation:

• Income from the exchange of crypto for fiat is defined as capital income;
• The difference of exchanging crypto for crypto is not considered as income;
• Any expenses that arise when exchanging crypto for crypto will not be considered costs;
• The provision of services to exchange crypto for fiat or fiat for crypto is not subject to VAT;
• In the annual report, income from cryptocurrency exchange must be reported and income tax must be calculated.

In 2024, tax rates remain virtually unchanged. However, some rules for cryptocurrency companies appear due to amendments to the Corporate Income Tax Act:

• Even with a small shareholding in another company (less than 5%) or when operating in special economic zones, companies can benefit from tax advantages on asset sales and capital gains exemption.
• The rules for transactions with legal entities registered in tax havens have changed. The documentation thresholds have now increased for transactions conducted directly with such companies. For financial transactions the threshold is PLN 2.5 million (approximately €532,000) and for non-financial transactions it is PLN 500,000 (approximately €106,500).
• The Polish cryptocurrency taxation system will be developed on the recommendations of the OECD, which has introduced a new international tax transparency system. The main goal is to establish common international standards for reporting cryptocurrency taxes to avoid heterogeneous practices in different countries.