Political figures and industry specialists are voicing strong opposition to a freshly introduced bill in Poland. This legislation places demanding obligations on Virtual Asset Service Providers (VASPs), with potential penalties of up to two years of imprisonment for those who fail to comply.
Simultaneously, in Turkey, the country’s financial regulatory body may soon gain the authority to freeze accounts related to crypto assets if they are suspected of involvement in unlawful activities.
Poland’s Controversial Legislation
The Sejm, Poland’s parliamentary lower house, recently approved the Crypto-Asset Market Act with a vote of 230 to 196. This act represents Poland’s adoption of the European Union’s Markets in Crypto-Assets (MiCA) framework.
The proposed law now requires approval from the Senate before it can be presented to President Karol Nawrocki for final approval.
The Act designates the Polish Financial Supervision Authority (KNF) as the primary regulatory body for the crypto sector. The KNF will oversee stablecoin providers, VASPs, and trading platforms, with a focus on maintaining market integrity, preventing manipulative practices, and safeguarding investor interests.
To secure a license, VASPs must demonstrate sufficient capital reserves and comprehensively outline their corporate structure, compliance protocols, and risk management strategies. Existing VASPs will have a six-month transition period to obtain the necessary license following the Act’s enactment.
Licensed VASPs are obligated to verify that their employees possess adequate financial knowledge, implement rigorous Know Your Customer (KYC) and anti-money laundering (AML) procedures, and keep their operational funds separate from client funds. In situations involving failures or bankruptcies, the regulator has the power to instruct a VASP to move customer assets to a different platform.
Entities dealing in digital assets that contravene the Act could be subjected to fines as high as $2.8 million or face imprisonment for a term of up to two years.
Widespread Opposition
The proposed law has faced significant criticism both within Poland and internationally. Przemysław Kral, CEO of zondacrypto, an exchange initially established in Poland but now headquartered in Estonia due to its more favorable business climate, has characterized the framework as “a significant setback and a textbook example of excessive regulation.”
In a statement made available to CoinGeek, Kral highlighted that regulation, when improperly implemented, can hinder rather than promote industry growth.
“Poland has gone too far, and its domestic crypto sector will inevitably suffer. The overly restrictive measures treat crypto as a threat rather than a chance for economic development,” he commented.
“These new rules could potentially criminalize fundamental activities such as smart contract creation, which could seriously impede innovation. Businesses may be compelled to move to more accommodating regions, leading to a loss of jobs and tax revenues.”
Several Polish politicians have also expressed concerns about the legislation, many of whom voted against the bill in the Sejm.
Janusz Kowalski, a member of the Sejm and previously a Minister of State Assets, criticized the highly prescriptive framework, suggesting it would stifle Poland’s emerging digital asset industry. At 118 pages, the Act is the most extensive interpretation of MiCA within the EU; by comparison, Germany’s similar framework spans 78 pages, while those of the Czech Republic, Romania, and Hungary are each less than 15 pages.
“This highlights the extent of the absurdity from Prime Minister Tusk’s administration, which is hindering the growth of crypto assets in Poland by incentivizing citizens to keep their savings abroad,” he declared.
President Nawrocki may be the digital asset sector’s greatest advocate against the new framework. Reportedly, the Warsaw-based Dudkowiak & Putyra law firm has indicated that the President is likely to reject the Act and introduce his own version, which is anticipated to be more favorable to the industry.
Turkey Plans to Freeze Crypto Accounts
In related news, the Turkish government is drafting legislation that would grant its financial regulator the power to freeze crypto accounts suspected of being involved in illegal activities.
According to sources reported by Bloomberg, these proposed changes will be presented to parliament within the next few weeks.
This bill is a part of the country’s larger effort to crack down on financial crimes, such as money laundering, and align with the Financial Action Task Force (FATF) standards. Turkey was removed from the FATF’s grey list last year, three years after it was added for inadequacies in its AML practices.
The proposed amendments would empower Turkey’s Financial Crimes Investigation Board (MASAK) to freeze and shut down accounts suspected of illegal activity across crypto platforms, banks, digital payment providers, and payment processing firms.
Sources suggest that the goal of the new legislation is to combat “account renting,” a practice where criminals exploit individuals’ accounts to move funds for a fee.
The adoption of digital assets has grown rapidly in Turkey recently, with nearly one in five Turkish citizens owning digital assets last year. That makes Turkey the third highest rate worldwide, behind the United Arab Emirates and Singapore. In addition, 99% of Turks say they know about digital assets, showing big growth from 16% in 2020.
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