Poland Enacts Strict Crypto-Asset Regulation, Mandating KNF Licensing and Imposing Penalties

Executive Summary

Poland's lower house of parliament, the Sejm, has passed a new Markets in Crypto-Assets Act, known as Bill 1424, which introduces comprehensive regulation for the nation's crypto-asset market. This legislation mandates that all Crypto Asset Service Providers (CASPs), encompassing exchanges, issuers, and custody providers, must obtain a license from the Polish Financial Supervision Authority (KNF). The new law imposes substantial penalties for non-compliance, including fines up to 10 million PLN (approximately $2.8 million USD) and prison sentences of up to two years. A six-month transition period is designated for existing CASPs to adhere to the new requirements.

The Event in Detail

The Sejm voted in favor of the new Crypto-Asset Market Act with 230 votes for and 196 against. This legislative action designates the KNF as the primary regulatory body for the country's crypto market. The law aligns Poland's regulatory framework with the European Union's Markets in Crypto-Assets Regulation (MiCAR). Under the provisions of Bill 1424, both domestic and foreign entities providing crypto-asset services in Poland are required to secure a license from the KNF. Failure to obtain this license within the stipulated six-month transitional period can lead to the cessation of operations and legal repercussions. The bill now proceeds to the Senate for further consideration.

Financial Mechanics and Regulatory Framework

The new Polish legislation deconstructs the financial operations of CASPs by establishing clear regulatory requirements. To obtain a license from the KNF, CASPs must submit comprehensive applications detailing their corporate structure, capital adequacy, internal controls, compliance systems, risk management policies, and Anti-Money Laundering (AML) procedures. The framework stipulates minimum capital requirements for CASPs, ranging from EUR 50,000 to EUR 150,000, depending on the services provided. The public fee for obtaining a CASP license is proposed at EUR 4,500. Additionally, CASPs will be required to pay an annual contribution to cover the costs of crypto-asset market oversight, calculated based on the average value of their crypto-asset service revenues over the preceding three fiscal years. The law introduces criminal liability for violations, with fines reaching 10 million Polish zlotys ($2.8 million) and potential prison terms up to two years. This stringent approach implements the EU MiCAR provisions, with some critics citing "gold-plating," suggesting an excessive national enhancement of EU rules.

Market Implications

The implementation of Poland's new Crypto-Asset Market Act is expected to have significant implications for the domestic crypto ecosystem and potentially influence broader EU trends. In the short term, existing CASPs in Poland will face a substantial compliance burden to meet the KNF's licensing requirements. This could lead to increased operational costs and, for smaller firms, may result in market exit or a deterrence of new entrants. With approximately 3 million crypto holders in Poland, the stricter regulations could affect user access to various services. Critics, including Łukasz Pierwienis of Binance Poland, have warned that the law could "destroy" Poland's crypto market, suggesting that only larger players with sufficient resources for compliance may survive. This move could either consolidate a more regulated and "safer" crypto environment or, if excessively restrictive, stifle innovation and adoption within the country. The legislation sets a precedent for other EU nations as they implement their own MiCA frameworks, potentially leading to varied interpretations and applications across the bloc.

Broader Context

Poland's adoption of stringent crypto regulations is part of a global trend towards increased oversight of digital assets. The EU MiCAR framework, fully effective December 30, 2024, has transformed the crypto-assets market across Europe, requiring CASPs to undergo new licensing proceedings. This is consistent with efforts seen in other jurisdictions, such as Hong Kong, where a Stablecoin Ordinance takes effect on August 1, 2025, introducing transitional periods and temporary licenses for issuers. These regulatory initiatives reflect a growing emphasis on investor protection, financial stability, and anti-money laundering measures within the evolving Web3 ecosystem. The Polish law, by strengthening KNF's oversight powers, including the authority to block suspicious domains, underscores a global movement to transition crypto markets from a "Wild West" environment to a more structured and regulated financial sector.