Poland’s lower house of parliament, the Sejm, has passed a bill on crypto assets that implements EU rules (MiCA). However, it has drawn sharp criticism from industry participants. The document is now to be considered by the Senate, after which it will be submitted to the president for signature.

The law provides for a significant expansion of the powers of the Polish Financial Supervision Commission (KNF), which gets the right to issue licenses to crypto asset service providers (CASPs), control the issuance of tokens, block suspicious domains, and impose millions of dollars in fines.

The KNF will also monitor exchanges, which are now required to keep clients’ funds separate from their own.

The most serious violations will be punishable by fines of up to PLN 10 million (approximately $2.75 million) or even imprisonment for up to two years. The punishable acts include operating without a license, issuing tokens without an approved information document, or violating reporting obligations.

Delphine Forma, Head of European Policy at Solidus Labs, noted in a commentary for Incrypted that the adoption of the law was an important step for the Polish market:

“Poland’s parliament has taken an important step by passing a bill to implement the EU’s MiCA framework, designating the KNF as the supervisory body and bringing clarity to the market, with the potential to finally open the doors for applications. However, by going beyond MiCA, the law risks undermining consistency across the EU and could stifle innovation.”

However, industry representatives warn that only large players can survive in such conditions in Poland, while startups and small companies will be forced to leave the market.

“The KNF is being given broad powers, which could have serious consequences,” said Lukasz Pierwienis of Binance Poland.

The crypto community also talks about excessive “gold plating” — when national regulators add additional requirements to European regulations. In particular, a crypto analyst under the pseudonym ?wiat Krypto wrote in X:

“The text of the law talks about horrendous fines, many requirements and the KNF, which can terminate the company’s activities “from day to day” by the decision of one official. […] The logic seems simple — “we don’t want to control this market, so we will destroy it so that no one dares to start operating in this sector.” […] The Sejm of the Republic of Poland has just passed a very harmful law on digital assets that will actually destroy the crypto business in our country.”

At the same time, the law’s supporters insist that the document is a step towards regulating the market and protecting investors. The explanatory note notes that the goal is “to implement the tasks set out in EU Regulation 2023/1114 in the area of effective supervision and investor protection.”

In this regard, Robert Nogacki, an attorney and founder of Kancelarii Prawnej Skarbiec, considers the adopted law to be necessary. In his opinion, this is “a turning point and the end of the Wild West era in the crypto world, where activities were often conducted without proper supervision.”

According to him, the adopted rules are “a belated but necessary response to years of abuse, as innovation cannot be an excuse for avoiding basic consumer protection standards”.

Meanwhile, the Polish authorities noted that the new rules will ensure the long-term development of the market and increase security through expanded supervisory powers.

The country has recently launched the first bitcoin ETF trading on the Warsaw Stock Exchange.