The EU MiCA legislation takes effect, Poland becomes a new hotbed for Web3 entrepreneurship

With the implementation of the EU's Markets in Crypto-Assets Regulation (MiCA), the enthusiasm of Web3 companies entering Europe is on the rise. This article will delve into Poland, a highly promising Web3 market.

Poland: A Promising Ground for Web3

Economic strength should not be underestimated

Poland, as one of the important economies in the European Union, ranks 6th among the 27 member states in terms of economic output. Although its fintech ecosystem started relatively late, Poland, as the largest financial services market in Central and Eastern Europe, is attracting talent and investment from the region, demonstrating tremendous development potential.

has become the preferred choice for Web3 companies to settle.

Poland has become an important commercial center in the Central and Eastern European region, with many companies choosing to establish physical entities here. This trend has also extended to the Web3 sector. As of 2024, the number of active registered VASP entities in Poland's virtual currency activity registry has exceeded 1,100, reflecting the booming development in this field. Currently, Poland has 126 Web 3.0 startups.

a large potential user base

Poland has a population of about 38.26 million, ranking fifth in the European Union. According to the latest survey, over 94% of the Polish population has heard of cryptocurrencies, but only 6.2% have a deep understanding, indicating that there is still significant room for market penetration.

In Poland, cryptocurrencies are primarily used as investment and speculative assets, with more than half of respondents using them for this purpose. The median amount invested by Poles in cryptocurrencies is 1,000 zloty, while the average is 7,642 zloty.

It is worth noting that the frequency of male investment in cryptocurrencies is three times that of females. Young people under 34 account for 41% of all individuals with crypto assets. Additionally, the prevalence of cryptocurrency ownership also increases with higher levels of education.

Poland's Web3 Regulatory Framework

main regulatory authorities

The Polish Financial Supervision Authority (KNF) is the main financial regulatory body responsible for supervising the banking, capital, insurance, pension sectors, payment institutions, and more. The regulatory objective of the KNF is to ensure the normal operation, stability, safety, and transparency of the financial market, protecting the interests of market participants. The KNF is also responsible for supervising Web3 enterprises conducting business activities or established in Poland.

Cryptographic Regulatory Policy Framework

With the official implementation of MiCA, Poland is advancing its domestic legislative work, with its draft known as the "Polish Law on the Cryptocurrency Asset Market." This bill is particularly important for registered VASP entities and those preparing to apply for a CASP license.

It is worth noting that Poland has significantly shortened the transition period stipulated by MiCA. According to the draft, entities currently registered as VASPs need to submit their CASP license applications by June 30, 2025. If a complete application is submitted before May 1, 2025, and notification is received, services may be provided during the extended period until September 30, 2025, or the date on which the license is granted/denied, whichever comes first.

The existing VASP registration system will be completely abolished starting from October 1, 2025. These measures are aimed at accelerating regulatory implementation, promoting market transparency and compliance, and aligning with MiCA as soon as possible.

Violation Penalty Measures

After obtaining the CASP license, enterprises must comply with the MiCA regulation and relevant regulatory provisions in Poland, including risk assessment, suspicious transaction identification, risk mitigation, etc. Violations may face administrative penalties, and in serious cases, criminal liability may be incurred. Penalty measures include:

• Public Information Announcement
• Command to stop specific activities
• Remove from the cryptocurrency activity register
• Prohibit relevant personnel from performing management duties
• Economic penalties can be as high as twice the illegal gains or 1 million euros.

In addition, individuals who do not report criminal suspects to the authorities or provide false information may face imprisonment of 3 months to 5 years.

Poland's Cryptocurrency Asset Tax Policy

Poland's tax regulations on crypto assets are relatively mature. According to the Personal Income Tax Act, virtual currencies are defined as digital representations of value that can be exchanged for legal tender. Income generated from cryptocurrency transactions is considered capital income, taxed at a rate of 19%, with no specific tax threshold.

It is important to note that not only will converting virtual currency into fiat currency create a tax obligation, but converting it into goods, services, or property will also create a tax obligation. However, exchanging cryptocurrencies for one another or converting them into stablecoins will not create a tax obligation.

Investors must accurately report their cryptocurrency income and fulfill their tax obligations. Those engaged in crypto activities in Poland are required to provide financial statements from exchanges to correctly declare their profits.

Conclusion

Poland, as an important economy in Central and Eastern Europe, has an active Web3 user base and an improving regulatory framework, providing good development opportunities for Web3 enterprises. However, the enactment of the MiCA legislation and the future introduction of a local regulatory framework for virtual assets in Poland will also bring new compliance challenges. Enterprises need to closely monitor policy changes and prepare for compliance to seize the development opportunities of the Web3 era in the Polish market.