The EU MiCA legislation takes effect, why do Web3 companies choose Poland?

Recently, with the implementation of the EU crypto assets market legislation (MiCA), more and more Web3 companies are beginning to pay attention to the European market. Among the many European countries, Poland is gradually becoming one of the favored destinations for Web3 enterprises. This article will delve into the development potential and regulatory environment of the Web3 market in Poland.

Development Potential of the Web3 Market in Poland

Economic Foundation

Poland, as the sixth largest economy in the European Union, occupies an important position in the Central European economy. Although its fintech ecosystem started relatively late, its development potential is enormous. As the largest financial services market in Central and Eastern Europe, Poland is attracting talent and investment from the region.

Enterprise Favorability

Poland has become an important business center in the Central and Eastern European region, attracting a large number of companies to establish a presence there. As of 2024, the number of actively registered VASP entities in Poland's virtual currency activity register has exceeded 1,100. Currently, Poland has 126 Web 3.0 startups, including billon, Golem Network, GamerHash, Fluency, DoxyChain, and others.

user base

Poland has a population of approximately 38.26 million, making it the fifth largest in the EU. According to a survey report from 2023, over 94% of Polish respondents have 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 mainly viewed as investment and speculative assets, with over half of the respondents using them for this purpose. The median amount invested by Poles in cryptocurrencies is 1,000 zlotys, while the average is 7,642 zlotys.

It is worth noting that the frequency of male investors in cryptocurrency is three times that of females. Young people under the age of 34 account for 41% of all those claiming to own crypto assets. Additionally, the prevalence of cryptocurrency ownership increases with higher levels of education.

Poland Web3 Regulatory Framework

regulatory agency

The main financial regulatory authority in Poland is the Financial Supervision Authority (KNF), responsible for regulating the banking, capital, insurance, and pension sectors, as well as payment institutions. The regulatory objectives of the KNF are to ensure the normal functioning, stability, safety, and transparency of the financial markets, and to protect the interests of market participants.

KNF is responsible for regulating Web3 enterprises conducting business activities in Poland or established in Poland.

Regulatory Policy

With the EU MiCA regulation officially coming into effect on December 30, 2024, Poland is advancing its domestic legislative work to align with MiCA. On December 9, 2024, the Polish government announced the draft of the "Polish Crypto Asset Market Act" (version four). This legislation is particularly significant for currently registered VASP entities and those preparing to apply for a CASP license.

It is worth noting that the draft "Cryptocurrency Market Act" in Poland significantly shortens the transitional period stipulated by MiCA:

1. Existing VASP entities must submit their CASP license application by June 30, 2025.
2. If a complete application is submitted before May 1, 2025, it may be extended to September 30, 2025, or the date of approval/denial of the permit (whichever is earlier) to continue providing services.
3. The VASP registration system will be completely abolished starting from October 1, 2025.

These regulations aim to accelerate the implementation of oversight, promote market transparency and compliance, and align with MiCA as soon as possible.

Violation Penalty

After obtaining a CASP license, companies must comply with the MiCA regulation and the regulatory requirements for crypto assets in Poland. Violations of relevant regulations may result in the following penalties:

1. Public Information Announcement
2. Cease specific business activities
3. Delisting from the virtual currency activity register
4. Prohibit relevant personnel from performing management duties (up to one year)
5. Economic penalties (up to twice the illegal income or 1 million euros)

In addition, individuals who fail to report criminal suspects to the authorities or provide false information may face criminal penalties of 3 months to 5 years in prison.

Poland's Cryptocurrency Tax Policy

Poland's tax policy on crypto 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 income, with a tax rate of 19%. Taxable situations include:

1. Convert virtual currency to fiat currency
2. Use virtual currency to exchange for goods, services, or property rights
3. Repaying debts with virtual currency
4. Mining and participating in Initial Coin Offering ( ICO )

It is worth noting that exchanges between cryptocurrencies or exchanges into stablecoins do not incur tax obligations, but relevant records must still be kept for reference.

In Poland, regardless of the amount of income, all income from cryptocurrencies is subject to a tax rate of 19%. Investors must accurately report their cryptocurrency income and fulfill their corresponding tax obligations.

Conclusion

As an important economy in Central and Eastern Europe, Poland has an active Web3 user base and a continuously improving regulatory framework, providing good development opportunities for Web3 enterprises. However, with the implementation of the EU MiCA legislation and the introduction of local regulatory frameworks in Poland, Web3 enterprises will also face new compliance challenges. In this context, businesses need to fully understand Poland's regulatory environment and market characteristics, and develop appropriate development strategies to seize the opportunities for growth in the Web3 era within the Polish market.