Under the new EU regulations, Poland has become a hotbed for Web3 startups

With the implementation of the EU's regulatory framework for crypto assets, the enthusiasm of Web3 enterprises to enter Europe is steadily increasing. Several law firms have recently received a large number of inquiries regarding crypto-friendly countries in Europe. This article will focus on the promising Polish market and conduct an in-depth analysis of its Web3 ecosystem development status.

Poland: A Huge Potential Web3 Market

The economic development prospects are broad.

Poland, as one of the important economies in Central Europe, currently ranks 6th in terms of economic output among the 27 EU countries. Although its fintech ecosystem started relatively late, the development potential is enormous. As the largest financial services market in Central and Eastern Europe, Poland is attracting talent and investment from the region, and a favorable macroeconomic environment indicates broad development prospects.

Web3 enterprises prefer to establish entities

Poland, as an important commercial center in Central and Eastern Europe, has attracted numerous companies to establish branches here, and this trend has also extended to the Web3 sector. As of 2024, the number of actively registered VASP entities in Poland's virtual currency activity registry has exceeded 1,100, demonstrating the vigorous development of this field. Currently, Poland has 126 Web3.0 startups covering various sub-sectors.

large potential user base

Poland has a population of approximately 38.26 million, ranking fifth in the European Union. According to the latest survey, the awareness of cryptocurrency among the Polish public is relatively high, with over 94% of respondents indicating that they have heard of it. However, the proportion of those who have a deep understanding of cryptocurrency is only 6.2%, indicating that there is still significant room for market penetration.

Surveys show that cryptocurrencies are primarily viewed as investment and speculative assets in Poland, with more than half of the respondents using them for this purpose. The frequency of male cryptocurrency investors is three times that of females, and individuals under 34 years old account for 41% of all cryptocurrency holders. Furthermore, the popularity of cryptocurrencies increases with higher education levels.

Poland's Web3 Regulatory Framework

main regulatory authorities

The main financial regulatory authority in Poland is the Financial Supervision Authority (KNF), which functions similarly to the Financial Supervisory Authority in many countries. The KNF is responsible for regulating multiple financial sectors including banking, capital markets, insurance, pensions, and payment institutions, with the aim of ensuring the normal operation, stability, safety, and transparency of the financial market. The KNF is also responsible for regulating Web3 companies that conduct business activities or are established in Poland.

crypto regulatory policy framework

With the European Union's Markets in Crypto-Assets Regulation (MiCA) officially coming into effect on December 30, 2024, Poland is actively advancing domestic legislative work to align with MiCA. The draft "Polish Crypto Assets Market Act" is an important component of this process.

The draft sets a shorter transition period for existing VASP licensed entities. According to the draft, entities currently registered as Virtual Asset Service Providers (VASP) need to submit their CASP license application by June 30, 2025. If a complete application is submitted before May 1, 2025, and confirmation from the regulatory authority is received, services may continue during the extended period until either September 30, 2025, or the day the license is granted/denied, whichever comes first.

It is worth noting that the existing VASP registration system will be completely abolished starting from October 1, 2025. These regulations aim to accelerate the implementation of supervision, promote market transparency and compliance, and align with MiCA as soon as possible.

Violation Penalty Measures

After obtaining the CASP license, enterprises must strictly comply with the MiCA regulation and Polish cryptocurrency asset regulatory requirements. This includes identifying and assessing money laundering and terrorist financing risks, identifying suspicious transactions, implementing risk mitigation measures, and regularly reporting to regulatory authorities.

Violating relevant regulations may face various penalties, including:

• Disclosure of Violations
• Order to cease specific activities
• Delisting from the virtual currency activity registry
• Prohibit relevant personnel from performing management duties
• Economic penalties can reach up to twice the amount obtained from the violation or 1 million euros.

In addition, individuals who fail to report criminal suspects in a timely manner or provide false information may face imprisonment of 3 months to 5 years.

Poland's Cryptocurrency Asset Tax Policy

Poland's tax policy on cryptocurrency assets is relatively mature. Since November 2020, Poland has introduced a new personal income tax form to facilitate residents in declaring cryptocurrency taxes.

In Poland, income generated from cryptocurrency trading is considered capital gains and is subject to a tax rate of 19%. It is worth noting that not only the exchange of cryptocurrency for fiat currency incurs a tax obligation, but also exchanging it for goods, services, or property will trigger a tax. However, exchanges between cryptocurrencies or exchanging for stablecoins do not incur a tax obligation.

Taxpayers need to accurately report income from cryptocurrencies and fulfill corresponding tax obligations. To do this, they must provide financial statements from exchanges used to buy and sell digital currencies to correctly calculate 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, with the implementation of the EU MiCA legislation and the introduction of Poland's local regulatory framework, businesses will also face new compliance challenges.

For Web3 companies intending to enter the Polish market, it is advisable to pay attention to the following points:

1. Closely monitor changes in Poland's cryptocurrency asset regulatory laws and adjust compliance strategies in a timely manner.
2. Prepare the CASP license application materials in advance to seize the time window of the transition period.
3. Establish a sound risk control and compliance system, especially for anti-money laundering and KYC processes.
4. Emphasize tax compliance and accurately record and report cryptocurrency transactions.
5. Consider seeking assistance from professional legal and tax advisors to ensure compliant operations.

With the gradual improvement of the regulatory framework, Poland is expected to become an important hub for Web3 innovation in Europe, providing ample development space for entrepreneurs who dare to innovate.