Poland Cryptocurrency exchange license

What are the Types of Crypto Licenses in Poland

To apply for a license for a cryptocurrency exchange in Poland, one must navigate the regulatory landscape established on October 31, 2021. At this time, cryptocurrency-related endeavors were deemed regulated, prompting additional requirements for businesses. These enterprises must register with the cryptocurrency business register under the Tax Administration Chamber in Katowice via the e-PUAP platform.

According to Article 2.1 of the Polish Act on Counteracting Money Laundering and Terrorist Financing, Virtual Asset Service Providers are categorized as Obliged Entities. Polish law delineates service types these providers can offer, each with distinct regulatory expectations. The mandated registration for the cryptocurrency business registry is pivotal for:

1. Exchange Services: Facilitating the conversion between virtual currencies and traditional payment methods.
2. Currency Trading: Enabling the trade of different virtual currencies.
3. Brokerage Services: Acting as intermediaries in the above-mentioned exchange services.
4. Custodian Wallet Services: Managing accounts that allow users to conduct and utilize virtual currency exchange transactions.

What Types of Activities Become Available After Obtaining a Crypto License in Poland?

Acquiring a crypto license in Poland is necessary for legal business in this niche. There are recognized types of activities in this area:

Asset transfers

In this case, providers authorize the trading of virtual assets between third parties. Customers can use virtual assets as a payment or transfer method with this service. The transfer can be internal or external, depending on the provider’s model. The law regulates this activity on financial supervision and anti-money laundering rules.

Intermediary services and marketplaces

Companies act as intermediaries for trading or exchanging virtual assets without being their direct owners. They create a platform where customers can buy or sell cryptocurrency for fiat or other assets without the company’s participation.

Custodial wallet

Here, clients get a secure way to store assets in a digital vault under the company’s control. Usually, the private key is securely stored by the service provider, while the client is provided with the public key. To transfer funds to third parties, you will need the provider’s support, which can be obtained through various communication methods.

Asset exchange

Conversion of virtual assets into fiat money. Providers list acceptable assets for client transactions. Exchanges are limited to the assets listed by the provider and may restrict third-party transfers. It is understood that the acquired virtual assets are primarily intended for the client’s investment.

More About Crypto Activities

Mining, buying, and selling virtual currencies are not considered traditional money or regulated by law. In 2020, the Polish Financial Services Authority provided recommendations to clarify crypto licensing in Poland. Virtual currencies were divided into three groups:

1. Security Tokens. Security tokens are similar to traditional securities or offer rights to participate in investments. They are regulated by the laws on trading in financial instruments and the management of alternative investment funds.
2. Utility Tokens are designed for specific utilities. They allow holders to access functionality that is exclusive to the token holder.
3. Payment tokens are also known as currency or exchange tokens. They have a specific issuer and are pegged to the stable value of a fiat currency. All by the definition of electronic currency in the Payment Services Act.

It is essential for those who intend to register crypto licensing in Poland to understand these categories.

Cryptocurrency Legislation in Poland

1. Act on Counteracting Money Laundering and Terrorist Financing: Foundation for AML/CTF protocols and sanctions in Poland, outlining specific responsibilities for virtual currency entities.
2. Act on Financial Market Supervision: Regulations for the conduct of financial service providers.
3. Act on Financial Instruments: Offerings of financial instruments by Polish entities.
4. Act on Investment Funds and Management of Alternative Investment Fund: Guidelines for investment funds and the management of their alternatives.
5. Payment Services Act and Subsequent Amendments: Сriteria and duties of payment service providers, including electronic money institutions.
6. Polish Penal Code: Сriminal offenses, sanctions, and provisions concerning money laundering and terrorist financing.
7. Cooperative Law: Principles for the formation, administration, and overall operation of companies within Poland.
8. In addition, global obligations such as UN Sanctions (Resolutions 1267 of 1999 and 1988 of 2011) and EU Sanctions (Council Regulation No 2580/2001, Regulation No 881/2002, Regulation No 753/2011) enforce restrictive measures on designated individuals and bodies.

Adherence to these legal acts is mandatory for entities aiming to obtain a crypto license in Poland and will determine the lawful operation of their crypto-related activities.

Advantages of Choosing a Crypto Exchange License in Poland

This country is one of the most progressive in Europe, having many benefits that distinguish it from other states. These advantages are likely to be significant in making the final decision, and here are some of them:

• The ability to buy a company and register crypto licensing in Poland remotely.
• Using an electronic signature, you can conveniently sign digital documents.
• There is no need to deposit authorized capital. It will be enough to register it in the amount of 5000 PLN.
• Physical presence in Poland is optional.

Comparing Crypto Licensing Conditions in Poland and Other Jurisdictions

If we compare Poland with a country like Lithuania, we can notice different regulatory approaches to cryptocurrency licensing requirements. Poland stands out in its work in domestic policy, anti-money laundering, and data security infrastructure. In Lithuania, there is an emphasis on authorized capital and a resident of the country who will be a board member. Lithuania obliges the company to have a separate anti-money laundering specialist, paying attention to market presence. As a result, there are some standard requirements between the countries, such as AML/KYC compliance and ongoing reporting obligations. In addition, there are specific differences in criteria, such as equity capital and local presence requirements, which demonstrates the diversity of regulation in Poland’s crypto license and elsewhere.

Crypto License Requirements in Poland

To operate in compliance with Poland crypto license regulations, a Polish company must meet several essential criteria:

1. Appoint a qualified employee responsible for AML/CTF compliance, as specified by anti-money laundering and terrorist financing laws.
2. Establish internal policies covering AML/KYC and internal control.
3. Implement procedures for complying with international sanctions.
4. Develop procedures for establishing and monitoring business relationships and customer identification.
5. Set up infrastructure for securely storing customer data.
6. Implement a risk-based approach considering identified risks through relevant risk assessments.
7. Define procedures for reporting suspicious transactions and other related activities.
8. Ensure shareholders and senior management possess a strong business reputation and a clean criminal record.

Navigating the Polish Cryptolicense Application Process and Timeframe

Starting the Poland crypto license journey involves several key steps:

1. Understand the project’s scope

Duration: 1 week.

• KYC Documentation: Collect necessary documents and describe the business.
• Prepare notarized and legalized power of attorney, verify the chosen business name, and gather shareholder and director criminal record data.

Receive the required documents, which may be done through a suitable delivery method.

2. For Company Registration (Sp. z.o.o. or SA)

Duration: 3-4 weeks.

• Sworn translations of certificates of criminal record and powers of attorney into Polish.
• Draw up notarial deeds for company registration and enter data into commercial and business registers.
• Prepare for obtaining a Polish Tax Number (PESEL).

3. Crypto Licensing in Poland

Duration: 2-3 weeks.

• Collect additional business information, tailor AML/KYC policies, and identify risk factors.
• Submit the application and required documents to Polish authorities and maintain communication during the registration.
• Appoint a qualified AML Officer, provide training, and ensure compliance with regulations.
• Translate internal documents into Polish.

4. For Corporate Account Opening and Accounting:

• Analyze suitable banks/EMIs based on risk appetite.
• Gather required documents, including fund flow, wealth source, account purpose, etc.
• Initiate onboarding with crypto-friendly EMIs.
• Guide the client through the account opening process.
• Develop accounting rules for the crypto company.
• Integrate an accountant and offer preliminary consultations for crypto accounting practices.

Business Registration

All the critical steps for business establishment in the country will be shown below:

1. The entity must choose a unique name that has yet to be claimed.
2. Registration with official bodies is required, specifically with the CEIDG or the KRS.
3. Depending on the business structure chosen, there are specific demands for minimum capital and the composition of the management.
4. An electronic signature and a profile on ePUAP, the government services portal, are prerequisites for online registration.
5. Future remote business management will necessitate electronic identification for official interactions, including those with tax authorities and the Social Security Administration (ZUS).
6. The most accessible business form for non-Polish nationals is a limited liability company (Sp.z o.o.), with other forms possibly restricted.
7. Appropriate activity codes from the PKD must be determined and included in the company’s registration documents.
8. While the company’s charter can list numerous activities, only ten can be featured in the KRS business register.
9. A minimum of PLN 5,000 is required as authorized capital for a limited liability company, which is deemed constituted upon signing the company agreement.
10. Post-registration, the company must open a corporate bank account.
11. Information about the ultimate beneficiaries must be filed with a designated register within seven days post-registration to avoid hefty fines.
12. Finally, within twenty-one days of registration, the NIP-8 form detailing the company’s bank and accounting information must be submitted to the tax office.

Duties of Virtual Asset Service Providers in Poland

While Polish legislation doesn’t explicitly oversee virtual asset transactions, it does impose regulations on entities engaged in virtual asset services. A Virtual Asset Service Provider (VASP) in Poland must strictly operate within the scope of its registered activities, adhere to the Poland crypto license requirements, and implement safeguards relevant to the types of virtual currencies handled. Non-compliance can lead to sanctions, including fines of up to PLN 100,000 and additional administrative penalties based on the gravity of the infringement.

Listed responsibilities of a Polish VASP include:

• Abiding by the activities specified in their registration.
• Enacting measures specific to the virtual currencies dealt with.
• Preventing the misuse of their services.
• Recording clients’ personal information diligently.
• Applying additional precautions for transactions over €1000.

Failure to fulfill these responsibilities could result in administrative penalties, including a fine of €5 million or 10% of the annual turnover, underscoring the importance of compliance with the Poland crypto license regulations.

Taxation Overview in Poland

The taxation system complements the regulatory framework for obtaining a crypto license in Poland. Thus, businesses are encouraged to delve into the virtual asset market. Virtual assets are not recognized as a legal method of payment. The income generated from virtual assets is divided into two tax categories:

• Personal income, which is taxed as capital gains at a rate of 18-32% for individuals.
• Business profits, which are taxed as capital gains.

Depending on the scale of their activities, companies benefit from a favorable tax regime with rates of 15% or 19%. Also, concerning the taxation of Poland crypto license, companies must comply with several regulations as of March 2023:

1. BT (Business Tax): Also at a rate of 19%, applied to company profits.
2. WCL (Capital Gains Tax): Imposed at 19% on profits from the sale of capital assets.
3. CIT (Corporate Income Tax): Levied 19% on company profits.
4. SA (Health Insurance Contributions): Fixed at 9%.
5. VAT (Value Added Tax): The standard rate is 23%.
6. SVP (Social Security): Ranging from 19.48% to 22.14% of the gross salary.

FAQ

Is it allowed to contribute authorized capital in cryptocurrency?

At the moment, this is only possible in fiat currency. It should be added that applicants may not make a payment at the first stages, but there will be corresponding obligations within their commercial activities.

How long is a cryptocurrency license in Poland valid?

A cryptocurrency license in Poland has no set expiration date; it is issued indefinitely.

What are Poland’s strategies for curbing money laundering and terrorism funding?

In Poland, entities dealing with registered virtual assets must adhere to a series of stringent duties post-registration, as per the legal framework. These include:

• Conducting a thorough risk evaluation to identify potential money laundering and terrorism funding threats linked to their operations and instituting appropriate financial safeguards.
• Documenting all client transactions meticulously.
• Keeping a detailed log of all measures implemented to thwart money laundering and terrorism funding in compliance with AML/CTF regulations.

What challenges might one encounter when seeking a cryptocurrency license in Poland?

While virtual asset services are lawful in Poland, the crypto asset sector remains largely unregulated. This lack of regulation can lead to ambiguous situations for crypto businesses navigating the complex and sometimes unclear legislative environment.