Poland's Crypto Law: Overregulation or Necessary Protection?

Poland’s parliament has advanced a contentious crypto asset regulation bill, aligning with the EU’s Markets in Crypto-Assets (MiCA) framework while introducing stricter domestic provisions. The Sejm, the lower house of parliament, approved the legislation with 230 votes in favor and 196 against, sending it to the Senate for final approval. The bill mandates a licensing regime for crypto asset service providers (CASPs), including exchanges, custody platforms, and issuers, requiring compliance with the Komisja Nadzoru Finansowego (KNF), Poland’s financial regulatortitle1^[1]. Failure to obtain a license could result in fines up to 10 million zlotys ($2.8 million) and imprisonment for up to two yearstitle2^[2].

Critics argue the law’s extensive requirements, including mandatory capital adequacy, AML procedures, and individual client account segregation, disproportionately burden smaller firms. Jakub Bartoszek, president of Cashify, described the legislation as “one of the most extensive” MiCA implementations, warning it could “deal a fatal blow to domestic companies operating in the crypto sector.” Industry stakeholders highlight Poland’s KNF as the “slowest regulator in the EU,” with an average application processing time of 30 months, further complicating compliancetitle3^[3].

Political opposition has also emerged, with lawmakers from the Law and Justice (PiS) party condemning the bill as “the largest and most restrictive cryptocurrency law in the EU.” Janusz Kowalski, a Sejm member, criticized the 118-page legislation as “overregulation,” contrasting it with shorter, more flexible laws in Germany and the Czech Republic. The KNF’s expanded powers, including domain blocking and criminal penalties, have been likened to a “repression apparatus,” raising concerns about stifling innovationtitle4^[4].

President Karol Nawrocki, a vocal crypto supporter during his election campaign, has hinted at a potential veto. He previously pledged to oppose “tyrannical regulations” and prioritize innovation over restrictive oversight. Sławomir Mentzen, a blockchain advocate and ial candidate, urged Nawrocki to intervene, warning the law could “destroy blockchain and stablecoins” in Polandtitle5^[5]. The president’s stance adds uncertainty, as the bill now awaits Senate review and final presidential approval.

The legislation has already triggered market shifts. XTB, one of Poland’s largest brokers, signaled it might seek a license in Cyprus to avoid the new rules. With 18% of Poles investing in crypto assets, regulators argue the law is necessary to combat fraud, citing Deputy Finance Minister Jurand Drop’s claim that 20% of investors report abuse. However, analysts warn the strict requirements could drive up to 90% of Polish crypto exchanges out of business by 2025, as smaller firms struggle with compliance coststitle6^[6].

The bill’s passage reflects a broader trend of EU member states adapting MiCA with national amendments. While proponents emphasize consumer protection, critics stress the risk of innovation loss and regulatory overreach. The Senate’s potential amendments, including softer penalties and extended transition periods, could determine whether Poland enforces one of the EU’s strictest crypto regimes or adopts a more balanced approachtitle7^[7].