Poland’s new crypto bill - protection or overkill?

[Botnake]

Poland’s parliament just passed the Crypto-Asset Market Act (Bill 1424) to align with the EU’s MiCA framework. But what stands out are the strict rules and penalties for crypto operators.

Under the bill, all crypto service providers (CASPs) - whether exchanges, issuers, or custodians  must apply for a license with Poland’s financial regulator (KNF) to operate legally in the country. The requirements include full disclosure of corporate structures, capital adequacy, AML compliance, and risk controls.

Here’s the part that’s raising eyebrows:

Fines up to 10 million PLN (~$2.8 million USD) for violations
Possible prison sentences up to 2 years

Critics in Poland are calling this one of the most restrictive crypto laws in the EU. They argue it could push smaller players out of the market, delay innovation, and possibly destroy Poland’s crypto sector, which already has around 3 million users. The KNF is also known to be slow in processing licenses (some say up to 30 months), which adds to the risk.

On the other hand, some people might argue this is actually good since it protects users and helps stop scams, rug pulls, and shady operators  which a lot of crypto folks have already fallen victim to.

here's the timeline of the bill .

https://cointelegraph.com/news/poland-parliament-passes-crypto-bill-criticism

i want to leave this 2 questions..

1) Are these penalties (10M PLN fine, 2 years prison) too harsh for the industry?
2) Will this protect users, or just kill off competition and leave the market to a few big players?

[Darker45]

I haven't read the entire bill, or rather law, but I'm generally in favor.

1. The penalties should be harsh. It isn't their money they're keeping. "Up to 2 years" imprisonment is even short. Should an FTX happen in the country, 2 years is a slap on the wrist.

2. It should protect users. Although not fully because we're talking about custodians, at least the conditions are there. Furthermore, such laws are meant to kill competition. That should be the intention. It's meant to trim down the number of players. Otherwise, it would be open for all. The goal is to prevent another Voyager, Celsius, FTX, BlockFi, Genesis Global, and many others.

[Slow death]

i want to leave this 2 questions..

1) Are these penalties (10M PLN fine, 2 years prison) too harsh for the industry?
2) Will this protect users, or just kill off competition and leave the market to a few big players?

When I read the part where you say that the regulator takes up to 30 months to grant a license, I was shocked, because if they are so slow at that point, then why are they rushing to create these laws when they will have to constantly inspect the exchanges? Because let's see, if it takes 30 months, then there is a lack of employees to check all the licensing requirements, so how will they be able to be quick in inspecting the exchanges, issuing fines and when the exchanges resolve all the problems, they will also be quick in re-inspecting the exchange and then releasing the exchange?

In my opinion, they should first focus on being quick in granting licenses, researching how much profit small exchanges can make, to impose fines that don't lead small exchanges to bankruptcy, because that would generate unemployment, and they would also lose taxes. I don't see any advantage in having exchanges closed.

[Botnake]

1. The penalties should be harsh. It isn't their money they're keeping. "Up to 2 years" imprisonment is even short. Should an FTX happen in the country, 2 years is a slap on the wrist.

That “up to two years of jail time” applies only to a specific violation, which is operating without a license.

What happened with FTX was way more serious - they were involved in fraud, conspiracy, and money laundering.

Operating without a license entails criminal liability, including up to two years in prison. Fines can reach 10 million zlotys (~$2.74 million).

[CryptoYar]

Poland new very strict crypto law showing difficult choice between protecting customers and encouraging innovation. Penalties including $2.8 million fine and up to two years in prison are too harsh for industry. They could instantly ruin small companies and are so severe they might scare away even honest foreign businesses especially since they could apply to minor mistakes. These tough rules will help protect users with stopping scams and making sure only financially strong companies operate but they will also likely crush competition with setting up huge barriers that only biggest companies can afford leading to safer but much smaller and less competitive Polish crypto market.

[adaseb]

These types of regulations will happen pretty much in every country, at least the developed ones.

In North America these regulations happened perhaps 5-10 years ago. Long ago you could use any exchange without KYC and now there are none exchanges out there. Remember Bitfinex, Poloniex, there were no regulations or KYC. But when crypto gained popuarity they finally had to start KYC users. They had no choice. And their reasons are no different than the Polish regulators. Its to prevent scams, prevent AML and keep the exchanges audit.

I think its normal what is happening, I just don't like the 30 month turn-around time. They need to be quicker or many exchanges will lose market share in Poland.

[Luzin]

1) Are these penalties (10M PLN fine, 2 years prison) too harsh for the industry?
2) Will this protect users, or just kill off competition and leave the market to a few big players?[/glow]

If you think about it logically, as a consumer, I would be quite happy with this regulatory standard. Because safety guarantees and other aspects would be better. The presence of legal certainty, clear regulations, increases trust, and this becomes a key advantage. But remember, we must understand that regulatory balance is very important. The balance between security/compliance and innovation/small business access.

If the regulations are too strict, it could make industry growth more difficult. So, regulations should exist in a balanced and open manner to allow easy development. If the regulations are too strict or the administration is too complex/expensive, it could pressure the local crypto sector and even push activities to the black market or countries with more relaxed regulations.

[kotajikikox]

Poland’s parliament just passed the Crypto-Asset Market Act (Bill 1424) to align with the EU’s MiCA framework. But what stands out are the strict rules and penalties for crypto operators.

Under the bill, all crypto service providers (CASPs) - whether exchanges, issuers, or custodians  must apply for a license with Poland’s financial regulator (KNF) to operate legally in the country. The requirements include full disclosure of corporate structures, capital adequacy, AML compliance, and risk controls.

Here’s the part that’s raising eyebrows:

Fines up to 10 million PLN (~$2.8 million USD) for violations
Possible prison sentences up to 2 years

They want to accept cryptocurrency into their country but under their own conditions and this is that. Depending on how the country will develop, some exchanges or other cryptocurrency businesses might still want to set up their companies in the country even with tighter rules if there are other benefits from their country. But if other countries don’t have as much strict rules and get to offer better benefits to investors and business owners then Poland might not have that much advantage.

[retreat]

1) Are these penalties (10M PLN fine, 2 years prison) too harsh for the industry?

At least the regulation is aimed at the players in the industry, even though it is a bit harsh, but that is their risk when they operate in one of the areas, and they need to comply with the laws in that area so that their business can operate safely.

2) Will this protect users, or just kill off competition and leave the market to a few big players?

What does this regulation protect users from? This regulation simply aims to ensure that businesses operate in accordance with government regulations. This ensures there are no tax evasions, no falsified documents, or anything else that could cause losses to the government in particular. Meanwhile, users remain at risk of losing their assets, as this regulation places greater emphasis on administrative compliance.

I never believed that any regulations issued by the government protected users, they only protected their own interests.

[fikrett]

They want to accept cryptocurrency into their country but under their own conditions and this is that. Depending on how the country will develop, some exchanges or other cryptocurrency businesses might still want to set up their companies in the country even with tighter rules if there are other benefits from their country. But if other countries don’t have as much strict rules and get to offer better benefits to investors and business owners then Poland might not have that much advantage.

Those who will have better regulations set up and running will be ahead of the others.

Many in the EU are still picky about crypto, and they really want all the control they want.

[Kagaru]

First such harsh penalties as a PLN 10 million fine or two years in prison indicate the potential effectiveness of the law on the one hand: it empowers law enforcement to hold those who break the rules strictly accountable. But on the other hand it scares away the segment with fewer resources which can quickly lead to the collapse of new ventures startups or small exchanges. Large companies are often able to cover these costs and risks but small ones may be left out.

Secondly ensuring user protection should be a major objective of the laws. For example operator fund segregation AML/KYC procedures risk control all of these things increase the safety of customer funds. But if protection comes at the cost of preventing new competition in the market then innovation may be stifled in the long run. Large exchanges and established companies will dominate the market and there will be no room for new or emerging projects.

In any case for those who are already working with this market or want to start working with it time is not running out preparations should start now. We need to prepare for technology security governance policy and legal aspects. And we also have a responsibility as users we need to verify and work on safe transparent platforms and continue to discuss against irregularities.

[hugeblack]

Is there any news about Non-Custodial services?
If the registration is simple (does not need 30 months) and the requirements are simple, it may be useful, otherwise this is a kind of ban as the large companies will be able to comply.

[Alpha Marine]

The KNF is also known to be slow in processing licenses (some say up to 30 months), which adds to the risk.

I would have been in favour if it doesn't take this long to process a licence. I'm not sure if it's actually true, but if it is, then it's not good. Why exactly does it take that long? That's over two years of waiting for a license to do business in the country. I understand that these things take time, but a maximum of one year should e enough for every check and processing. 

1) Are these penalties (10M PLN fine, 2 years prison) too harsh for the industry?

No, they're not too much. The penalty for defaulting should be huge so people won't default. If it was a little something they can pay easily, they will break the law and simply pay the fines.

2) Will this protect users, or just kill off competition and leave the market to a few big players?[/glow]

Aside from the fact that the processing period for the licences is too long, I don't think it will affect competition in the market. Or there may be other factors we are unaware of, such as licenses being too expensive for smaller firms or big firms being prioritised over small firms in the country.

[_act_]

1) Are these penalties (10M PLN fine, 2 years prison) too harsh for the industry?
2) Will this protect users, or just kill off competition and leave the market to a few big players?

I do not think the penalties are too hash because exchanges that are not decentralized supposed to be given a license in the countries that they are operating.

Licensing can kill small businesses. What that kills the small businesses is that the startup capital in the regulations can be too huge for small businesses to have.

[Catenaccio]

When I read the part where you say that the regulator takes up to 30 months to grant a license, I was shocked, because if they are so slow at that point, then why are they rushing to create these laws when they will have to constantly inspect the exchanges? Because let's see, if it takes 30 months, then there is a lack of employees to check all the licensing requirements, so how will they be able to be quick in inspecting the exchanges, issuing fines and when the exchanges resolve all the problems, they will also be quick in re-inspecting the exchange and then releasing the exchange?

In my opinion, they should first focus on being quick in granting licenses, researching how much profit small exchanges can make, to impose fines that don't lead small exchanges to bankruptcy, because that would generate unemployment, and they would also lose taxes. I don't see any advantage in having exchanges closed.

30 months is too long waiting and processing time in cryptocurrency industry which is very quickly changes. Let's kip about money games, each market cycle (that has 4 years length from bear to bull market) has different technological trends and if a company with ideas for product development has to wait for 30 months to get a license, it's too long and perhaps at a time of receiving a license, the trend gone and the product development idea already became useless.

I know altcoin projects are risky and they often polish something promising in their white papers while products can not work well as described. It's another thing that I believe is different than license processing time that is up to 30 months.

[john_egbert]

Regulating the CEX-like platforms is good, they should be accountable if something happens without the license, imo.

It would hurt smaller players because of the costs / legalities, but overall, it should be done.

The punishment for it seems to be not that big (on a scale of what may happen), we will see about that.

[Botnake]

Is there any news about Non-Custodial services?

none yet.

If the registration is simple (does not need 30 months) and the requirements are simple, it may be useful, otherwise this is a kind of ban as the large companies will be able to comply.

They say they’re understaffed and that they have to go through proper evaluation of the requirements, but honestly I think they’re just too slow. Some countries don’t take that long to approve or deny an application.

For instance, in Estonia it only takes 2–3 months, while in Malta or Singapore it’s around 6–12 months.

What does this regulation protect users from? This regulation simply aims to ensure that businesses operate in accordance with government regulations. This ensures there are no tax evasions, no falsified documents, or anything else that could cause losses to the government in particular. Meanwhile, users remain at risk of losing their assets, as this regulation places greater emphasis on administrative compliance.

I never believed that any regulations issued by the government protected users, they only protected their own interests.

That’s wrong. What you mentioned is just part of what the government gets, but user protection is also a big part of it. If an exchange scams someone, users can file a complaint with the regulators and ask for help, or even file a case with the support of regulations. Compared to non-licensed exchanges, where you don’t even know how to hold them liable, at least with licensed ones you have that option.

[Felicity_Tide]

1) Are these penalties (10M PLN fine, 2 years prison) too harsh for the industry?

I don't think the penalties are too much.
We've always know Cex as platforms that works under regulation, and the requirements given by the Polish government are not new, which doesn't makes these whole policies new either. If getting a license is what it takes for these exchanges to operate, then they should get one, most especially when the whole process isn't tedious.

2) Will this protect users, or just kill off competition and leave the market to a few big players?

It will protect users to some extent, and at the same time, give the government what they want. But the big question becomes, how are these exchanges going to replicate similar actions on their customers?, because they will surely do something like that.

[freedomgo]

Bigger penalties will help prevent or at least minimize scams. Exchanges that want to operate will make sure they get a license first before catering to customers in a specific country. And I think that’s fine, because running an exchange really requires big capital. You need millions just to ensure liquidity.

If they don’t have that kind of money, they shouldn’t operate. Imagine, even smaller exchanges usually have at least $10 million in daily trading volume, while the big ones handle billions. It’s too risky if the operators don’t have strong backing.

[joniboini]

For instance, in Estonia it only takes 2–3 months, while in Malta or Singapore it’s around 6–12 months.

To be fair, being fast doesn't mean they're doing a good job. They may be approving so many of them because their economy relies on it, or they have a lot ot manpower to do that. I'm sure victims of scams would rather choose the government being slow instead of approving willy nilly.

That being said, what's the average time required for the approval? Because you said up to, I'd imagine the average approval time to be faster than that. Hard to imagine every license needs 30 months to be approved.