Poland’s Crypto Law Sparks Regulatory vs. Innovation Battle as Firms Warn of Exodus

Poland’s lower house of parliament, the Sejm, has approved a contentious crypto law that significantly expands the powers of the Polish Financial Supervision Authority (KNF) and introduces stringent penalties for violations. The legislation aligns with the European Union’s Markets in Crypto-Assets Regulation (MiCA) framework but has drawn sharp criticism for exceeding EU requirements and potentially stifling innovation in the sector. The law mandates that all crypto asset service providers (CASPs), including exchanges, issuers, and custody providers, obtain a license from the KNF to operate in Poland. Non-compliance could result in fines of up to 10 million zlotys (approximately $2.75 million) or prison sentences of up to two years Poland's Sejm^[1].

Under the new rules, the KNF will oversee token issuance, enforce reporting obligations, and block suspicious domains. Exchanges will also be required to maintain separate accounts for client funds to prevent misuse. The law’s proponents argue it addresses long-standing gaps in consumer protection and market oversight, labeling it a “watershed moment” that curtails the “Wild West” era of crypto Poland's Sejm^[2]. However, critics, including the opposition Law and Justice (PiS) party, contend that the legislation’s excessive length and complexity—118 pages of overregulation—risk driving smaller firms out of the market. Janusz Kowalski of PiS warned that the law could harm Poland’s crypto ecosystem, which already includes three million crypto holders evrimagaci.org^[3].

Industry stakeholders have raised concerns about the law’s practical implications. Blockchain advocate Tomasz Mentzen highlighted the KNF’s sluggish regulatory processes, noting an average application processing time of 30 months, which could deter new entrants. Meanwhile, analysts have criticized the law for enabling the KNF to “terminate company activities ‘any day now’” through unilateral decisions, effectively creating a “repression apparatus” rather than a supervisory body cointelegraph.com^[4]. Binance Poland’s Lukasz Perwienis warned that the KNF’s expanded authority could lead to “serious consequences” for the sector, with some firms considering relocating to jurisdictions like Cyprus to avoid compliance burdens coincentral.com^[5].

The law’s passage has also sparked political tensions. President Karol Nawrocki, a vocal crypto supporter, had previously pledged to resist “tyrannical regulations” during his election campaign. However, the Sejm’s approval of the bill has left industry leaders urging him to veto it, citing its potential to “destroy blockchain and stablecoins” in Poland evrimagaci.org^[6]. The legislation now moves to the Senate for review, with a six-month transitional period for CASPs to secure licenses. Failure to comply could result in operational shutdowns, raising fears of a mass exodus of startups and small firms incrypted.com^[7].

Legal experts have offered mixed perspectives. Robert Nogacki, an attorney, defended the law as a necessary step to combat fraud and protect investors, stating that “innovation cannot be an excuse for avoiding consumer protection.” Conversely, Delphine Forma of Solidus Labs cautioned that exceeding MiCA requirements risks undermining EU regulatory coherence and stifling innovation incrypted.com^[8]. The government maintains that the law will ensure long-term market stability, citing the recent launch of Poland’s first Bitcoin ETF as evidence of the sector’s potential.

As the Senate prepares to deliberate, the law’s future remains uncertain. With industry leaders mobilizing against its implementation and President Nawrocki’s veto power looming, the next few weeks will determine whether Poland’s crypto market faces a regulatory crackdown or a reprieve. The outcome could shape the sector’s trajectory in Central and Eastern Europe, where Poland has emerged as a key hub for digital asset innovation coincentral.com^[9].