Cryptocurrency Business Register in Poland
Conducting business activity in the field of cryprocurrencies in Poland becomes a regulated business shortly. Cryptocurrency entrepreneur will be obligated to obtain entry into Cryptocurrency Business Register in Poland. Entry into cryptocurency register shall be subject to certain formal conditions.
New Polish AML regulation
Firstly, it would do well to recall that, according to Article 1, paragraph 1 Directive (Eu) 2018/843 Of The European Parliament And Of The Council of 30 May 2018:
Member States shall ensure that providers of exchange services between virtual currencies and fiat currencies, and custodian wallet providers, are registered, that currency exchange and cheque cashing offices, and trust or company service providers are licensed or registered, and that providers of gambling services are regulated.
Therefore, legislative bodies of each EU State had time to implement regulations introducing system of registration of providers of exchange services between virtual currencies and fiat currencies. Members States might choose implementation in a simple form of registration procedure to create list of entities conducting business activity in cryptocurrency area. On the other hand EU State might choose to introduce cryptocurrency license procedure. Furthermore, Member State might choose to define virtual currency exchange services as financial services, which will obligate entity to obtain financial license.
Without creating new internal regulations by Member States abovementioned obligation could not be fulfilled by entrepreneur, In other words, the entry to “cryptocurrency register” or obtaining “cryptocurrency licence” was not required.
Polish Parliament for very long time has not implemented 5th AML Directive in above mentioned scope and there was not cryptocurrency entities register nor obligation to obtain cryptocurrency licence in Poland. Furthermore, cryptocurrency exchange services (which not covers managing clients’ accounts and holding their funds – i.e. exchange platforms) are still not classified as payment services, therefore there is no obligation to obtain any financial license.
However, new Polish AML regulation introduced obligation of entry into cryptocurrency business register in Poland. Therefore, regulation of activities in the field of virtual currencies will have a form of registration not cryptocurrency license in Poland.
Polish Cryptocurrency Register
According to new Polish AML Law business “activities in the field of virtual currencies”, is a regulated activity and may be performed only after entry in the cryptocurrency business register in Poland.
“Activities in the field of virtual currencies” are activities consisting in the provision of services in the scope of:
a) exchange between virtual currencies and means of payment;
b) exchange between virtual currencies;
c) intermediation in the exchange referred to in letter a or b;
d) keeping maintaining the accounts in electronic form, of identifying data enabling the entitled persons to use virtual currency units, including the conduct of transactions of their exchange.”
Entry into Cryptocurrency Business Register in Poland will be connected with fulfilling certain conditions.
First of all, “virtual currencies activities” will be allowed to performed by:
- a natural person who has not been legally convicted of an intentional crime against the activity of state institutions and local government, against the administration of justice, against the credibility of documents, against property, against economic turnover and property interests in civil law transactions, against money and securities trading, an offense committed for the purpose of material or personal gain or an intentional fiscal offense;
- Polish company, which representative or representatives have not been legally convicted of the offense referred to in point 1
The above mentioned requirement of no criminal record in Poland shall apply also to the beneficial owner of the cryptocurrency company in Poland.
Requirement of clean criminal record may be fulfilled by attaching clearance certificate issued by Polish Ministry of Justice. However, in my opinion the regulator will check criminal record of the applicant or representative of the applicant on its own in Polish National Criminal Record.
Secondly, persons conducting virtual currencies business and representatives of Polish cryptocurrencies companies are required to have knowledge or experience related to the activities in that field. According to Polish AML Act this condition is fulfilled after:
- completing a training or course covering legal or practical issues related to the virtual currencies activity; or
- performing activities in the field of virtual currencies for a period of at least one year, which has to be proved by relevant documents.
Currently, there is no explanation and any comment regarding fulfilling those requirements. Who will be entitle to perform above mentioned trainings? What kind of documents has to be provided to confirm experience in the field of virtual currencies? The regulations will probably remain unclear in this respect.
It is worth noted according to new regulation entry into Polish virtual currencies register shall be made in 14 days.
Effective date of Polish Cryptocurrency Register
The first important date is 1st November 2021. From that moment new AML regulations comes into force, according to which virtual currencies will become a regulated activity and Cryptocurrency Business Register in Poland is activated. However, Polish entrepreneurs who conduct “activities in the field of virtual currencies” before 1st November will have additional 6 months to adapt their activities to the new requirements and obtaining an entry in the register.
In other words, new companies in Poland, which will be registered after 1st November 2021 will have to obtain entry into virtual currencies register before starting activity in that scope. The entrepreneurs registered and performing “activities in the field of virtual currencies” before 1st November 2021 will have to entry into cryptocurrency register until 1st May 2022.
An entity operating in the field of virtual currencies without obtaining an entry into Cryptocurrency Business Register in Poland may be subjected of the fine of up to PLN 100.000.
Amendments to KYC process
Currently, upon Polish AML Act obliged institutions shall apply to the customer due diligence measures in the case of conducting an occasional transaction which constitutes a transfer of funds of an amount exceeding the equivalent of EUR 1.000. Our Law Firm in Poland was on position that above mentioned limit applied also to cryptocurenncies occasional transactions. However, there were different interpretations in that regards.
As of 1st November 2021, we will not have more doubts. According to new Polish AML regulation obliged institutions shall apply the financial security measures in the case of conducting an occasional transaction of virtual currency of the amount exceeding or the equivalent of EUR 1.000.
Occasional transaction shall be understood as a transaction which has not element of duration. Therefore it is single transaction. Parties of transaction do not know if they make or do not plan to make other transactions in future etc. The best example is cryptocurrency ATM, when random client visits ATM to buy/sell or exchange coins. Operator of ATM is not obligated to perform KYC process for such client if transaction is not equivalent or does not exceeds EUR 1.000 ( around PLN 4.500). Opposite, operator has to perform KYC process for client who is interested in buying/selling coins for EUR 1.000 and more.