EU's MiCA Law Takes Effect: Why Are Web3 Startups Rushing to Poland?
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EU's MiCA Law Takes Effect: Why Are Web3 Startups Rushing to Poland?
Poland, as a key economy in Central and Eastern Europe, boasts an active Web3 user base and an increasingly robust regulatory framework, offering favorable development opportunities for Web3 enterprises and making it an increasingly attractive destination for Web3 entrepreneurs.
Navigating Web3 tides with focused insightsAuthor: Liu Honglin
With the MiCA regulation now in effect, Web3 companies are increasingly enthusiastic about expanding into Europe. Recently, ManQin Law Firm has received a large volume of inquiries regarding Web3-friendly countries in Europe. In response, we are launching a series of articles to deeply analyze the cryptocurrency ecosystems across European nations. This installment focuses on the highly promising Polish market.
Poland: A Web3 Market with Strong Growth Potential
Poland's Economy Shows Strong Growth Prospects
Poland plays a significant role in Central Europe’s economy and is one of the key economies within the European Union, consistently ranking 6th among the EU’s 27 member states in terms of economic output.
According to a 2023 report by the Fintech Foundation, although Poland’s fintech ecosystem started later than others, it holds immense potential. As the largest financial services market in Central and Eastern Europe, Poland is attracting regional talent and investment, with favorable macroeconomic conditions signaling broad development prospects.
Establishing Entities in Poland Is Popular Among Web3 Companies
Poland is a major business hub in Central and Eastern Europe, drawing numerous enterprises to establish local entities. Nearly 40% of the region’s top 500 companies are based in Poland—a trend now extending into the Web3 sector.
As of 2024, over 1,100 Virtual Asset Service Providers (VASPs) are actively registered in Poland’s virtual currency activity registry, reflecting strong growth in this field.
Currently, Poland hosts 126 Web3.0 startups, including billon, Golem Network, GamerHash, Fluency, and DoxyChain.
Poland Has a Significant Pool of Potential Web3 Users
Poland has a population of approximately 38.26 million, making it the fifth-largest country in the EU by population. According to the 2023 report “Cryptocurrency Adoption in Poland,” public awareness of cryptocurrencies is high, with over 94% of respondents having heard of them. However, only about 6.2% claim a deep understanding, indicating substantial room for further market education and adoption.
The report notes that in Poland, cryptocurrencies are primarily used as investment and speculative assets, with more than half of respondents using them for these purposes. They are rarely used to participate in blockchain-based projects, purchase goods and services, or transfer funds.
The median amount Poles report investing in cryptocurrencies is 1,000 PLN, with an average of 7,642 PLN. After excluding the top 5% of outliers, the average drops to 5,149 PLN.
Men invest in cryptocurrencies three times more frequently than women. Young people (under 34 years old) account for 41% of those who report owning crypto assets. Additionally, cryptocurrency ownership increases with higher levels of education.
Polish Web3 Regulatory Authorities
Poland’s primary financial regulator is the Financial Supervision Authority (KNF), which functions similarly to China’s National Financial Regulatory Administration.
The KNF oversees banks, capital markets, insurance, pension sectors, and payment institutions. Its mission is to ensure the proper functioning, stability, security, and transparency of financial markets, protect investor confidence, and safeguard participants’ interests.
The KNF also regulates Web3 companies operating in or established in Poland.
On November 7, 2024, Cointelegraph reported that Poland’s KNF issued a public warning to Foris DAX MT, a Malta-based company operating under the Crypto.com brand, accusing it of conducting unauthorized financial activities in Poland.
Jacek Bardzczewski, head of the KNF department, explained that under Polish law—specifically Article 178 of the Act on Trading in Financial Instruments—any entity offering brokerage or investment services must hold an appropriate license to operate legally.
Poland’s Cryptocurrency Regulatory Framework
Shorter Transition Period for Existing VASP License Holders
With the EU’s Markets in Crypto-Assets Regulation (MiCA) coming into force on December 30, 2024, Poland is undergoing a significant regulatory transformation in cryptocurrency oversight. The country is currently advancing domestic legislation to align with MiCA, known as the draft “Polish Act on the Market for Crypto-Assets.” On December 9, 2024, the fourth version of this draft was published on the website of Poland’s Legislative Center. This proposed law is particularly important for entities already registered in the VASP registry and those preparing to apply for a Crypto-Asset Service Provider (CASP) license. Currently, the draft is at the government stage and has not yet been submitted to parliament. Therefore, amendments may occur during further legislative proceedings. However, the overall legislative direction is unlikely to change fundamentally.
Overall, the draft Polish Act on the Market for Crypto-Assets significantly shortens the transition period stipulated under MiCA.
Under the EU’s MiCA regulation, the transition period extends until July 1, 2026. However, according to the Polish draft law, entities currently registered as Virtual Asset Service Providers (VASPs) must submit their CASP license applications by June 30, 2025.
If a VASP-licensed entity submits a complete CASP license application before May 1, 2025, and receives confirmation from the KNF acknowledging receipt, it may continue operations until September 30, 2025—or until a decision on its license application is made, whichever comes first.
Entities without a VASP license must obtain the new CASP license to conduct business activities in the EU.
Notably, the existing VASP registration system will be fully abolished starting October 1, 2025.
In summary, Poland’s draft Crypto-Assets Market Act substantially accelerates the timeline set by the EU’s MiCA regulation, imposing earlier application deadlines for existing VASP entities and setting a clear end date for the current VASP registry. This reflects Poland’s intent to expedite regulatory implementation, promote market transparency and compliance, and align swiftly with MiCA.
Potential Penalties for Violating Obligations After Obtaining a Polish CASP License
After obtaining a license, cryptocurrency firms must comply with both MiCA and Polish crypto regulations. This includes identifying and assessing money laundering and terrorist financing risks related to their activities, detecting suspicious transactions, implementing risk mitigation measures, and submitting regular reports to regulators (typically quarterly) via designated portals. They must also adhere to Financial Action Task Force (FATF) standards and responsibly manage crypto transactions.
Failure to fulfill post-registration obligations may result in administrative penalties imposed by Polish authorities. Individuals acting on behalf of the entity may also face criminal liability for certain violations. These penalties include:
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Publication of information about the entity and its illegal activities on the public information bulletin of the Office serving the Minister of Finance,
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Orders to cease specific actions of the entity,
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Removal from the register of entities active in the virtual currency sector,
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Banning responsible individuals from holding management positions for up to one year,
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Economic sanctions of up to twice the amount of benefit gained or loss avoided due to the infringement. If the benefit or loss cannot be determined, the maximum fine is 1,000,000 EUR.
Additionally, individuals representing the entity who fail to report suspected criminal activity or provide false or misleading data about transactions, accounts, or persons may face criminal charges and be sentenced to imprisonment ranging from 3 months to 5 years.
How Are Cryptocurrencies Taxed in Poland?
Poland has a mature and well-established tax framework for virtual assets.
As early as November 2020, Polish authorities introduced a revised PIT-38 (Personal Income Tax) form to facilitate cryptocurrency tax reporting for residents.
In Poland, taxation of cryptocurrency transactions follows specific guidelines defined by national tax law. Under the Personal Income Tax Act, virtual currencies are defined as digital representations of value that can be exchanged for legal tender and accepted as a means of exchange. However, certain categories are explicitly excluded, such as fiat currency issued by central banks, international accounting units, e-money, financial instruments, bills of exchange, and checks. These exclusions clarify the definition of virtual currency, ensuring consistent and targeted tax treatment.
Income derived from cryptocurrency transactions is classified as income from monetary capital. Transactions involving virtual currencies fall into several categories:
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Exchanging virtual currency for fiat currency (e.g., converting cryptocurrency to traditional money)
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Using virtual currency to purchase goods, services, or property rights
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Settling debts with virtual currency
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Mining and participating in initial coin offerings (ICOs)
It is important to note that tax obligations arise not only when converting virtual currency to fiat but also when using it to acquire goods, services, or property. However, exchanging one cryptocurrency for another or converting to stablecoins does not trigger a taxable event. While some transactions are non-taxable, taxpayers are still required to maintain accurate records for audit or verification purposes.
Poland applies a flat 19% tax rate on cryptocurrency gains. There is no tax-free threshold—any income from cryptocurrency, regardless of amount, is subject to the 19% tax. Investors must accurately report their virtual asset income and fulfill their tax obligations accordingly.
The Polish government does not classify cryptocurrencies as “currency units, payment instruments, or electronic money.” Therefore, individuals engaging in crypto-related activities must provide financial statements from the cryptocurrency exchanges they use to buy and sell digital assets in order to correctly report profits from crypto transactions.
For example, Mr. Zhang purchased 1 Bitcoin for 10,000 PLN on January 1, 2023. On May 1, 2024, he sold that Bitcoin for 15,000 PLN.
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Revenue: 15,000 PLN
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Cost: 10,000 PLN
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Profit: 15,000 PLN - 10,000 PLN = 5,000 PLN
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Tax due: 5,000 PLN × 19% = 950 PLN
Mr. Zhang must declare and pay this 950 PLN as personal income tax (PIT).
ManQin Law Firm Summary
As a key economy in Central and Eastern Europe, Poland offers a dynamic Web3 user base and an evolving regulatory framework, creating favorable conditions for Web3 businesses and making it an increasingly attractive destination for Web3 entrepreneurs. However, the implementation of the EU’s MiCA regulation and the future introduction of Poland’s domestic virtual asset regulations will also bring new compliance challenges.
ManQin Law Firm has extensive experience and a dedicated team in Web3 legal services, offering comprehensive legal support to Web3 companies expanding into Poland, including:
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Company Formation and Licensing: Assisting clients in establishing entities in Poland and guiding them through the CASP license application process in accordance with MiCA and Polish regulations to ensure compliant operations.
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Tax Planning and Compliance: Providing expert tax advisory and planning services tailored to Poland’s complex cryptocurrency tax regime to minimize tax risks.
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Compliance and Risk Management System Development: Helping companies build robust anti-money laundering (AML) and know-your-customer (KYC) frameworks to effectively mitigate legal risks.
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Dispute Resolution and Legal Advisory: Offering timely legal counsel during operations and representing clients in negotiations or litigation if disputes arise.
ManQin Law Firm is committed to being the most trusted partner for Web3 companies entering Europe. With deep expertise in MiCA and Polish local regulations, combined with extensive practical experience, we help our clients achieve sustainable growth in the Polish market and seize opportunities in the Web3 era.
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