Some initial insights into and recommendations on the implementation of Regulation (EU) 2023/114 in crypto-assets markets (“MiCA”) in Poland
MiCA was published on 9th June 2023 and is aimed at the protection of investors and the establishing of a transparent crypto -assets market , enhancing the safeguards for holders of crypto-assets, financial stability and the integrity of crypto -assets markets. MiCA regulates, among other things, the public offering, issuing and permitting of crypto- assets for trade.
The EU Regulation 2023/14 will take effect directly with some exceptions on 30th December 2024 in Poland and other EU member states. As of 30th June 2024 regulations of MiCA will apply to asset reference and e-money tokens. It is expected that the transition period of MiCA will last until 1st July 2026 and during the transition period crypto asset service providers will still be entitled to offer their services on an unregulated market, however, these services will still be subject to provisions of counteracting money laundering, financing terrorism and to scrutiny of the Polish Financial Supervision Authority (“KNF”). Pursuant to Article 143 of MiCA, Poland and other EU member states can introduce transitional measures allowing entities already operating in the crypto – currency market to adapt and tailor their businesses to the requirements of MiCA. However, caution should be taken as member states may shorten the transition period and/or make the transition period applicable to certain kinds of crypto – currency. In Poland the transition period may be shortened by 12 months for some kinds of crypto – assets and this issue is now under discussion.
MiCA defines precisely, among other things, the following:
crypto – assets meaning a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger or similar technology;
asset-referenced token’ meaning a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies;
electronic money token’ or ‘e-money token’ meaning a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency.
In accordance with MiCA the so – called “Crypto Service Provider” status can be granted to entities that (1) have not been regulated and supervised so far (e.g. crypto-currency stock exchanges) after obtaining the appropriate license and (2) some traditional financial institutions (e.g. banks) after notifying their intention to provide crypto – currency services.
As MiCA will directly apply any further legal acts at national level in this area will be rather limited. In many European Countries, including Poland, so called “Regulatory Technical Standards” implementing MiCA into national systems will be prepared. In Poland a new bill of the Act on Crypto-Assets (“ACA ”) is currently being read and contemplated in the Polish Parliament. It is expected that ACA will be introduced by the end of this year at the latest.
The main regulations covered by the ACA are as follows:
- Appointing KNF as the body responsible for supervising the execution of MiCA in Poland
- Imposing new obligations on issuers of crypto assets including obligations to submit information to KNF about their business activities,
- Enhancing powers of KNF with regards to penalties and other financial measures that can be imposed on issuers of crypto assets,
- Imposing criminal liability for supervised entities and their directors for violation of legal provisions of MiCA and acts related to crypto assets,
- Possibility of addressing crypto asset services including public offerings in an electronic way.
To ensure a timely and orderly transition of MiCA in Poland, we propose that entities already engaged in crypto – currency services should make adequate preparations as soon as possible to. reduce the risk of disruptive business model adjustments. These preparations should involve early dialogue between these entities and KNF to inform KNF of their transition plans. This should include especially:
- informing KNF and clients of their transition plans as early as possible
- informing clients about the regulatory status of the crypto assets and /or services they are offering in Poland
- clarifying the regulatory status of their products and/or services they are offering to avoid confusion with regulated offerings in the light of MiCA and ACA provisions
- applying for MiCA authorization as soon as possible and without this authorization they will not benefit from passporting within the EU during the transition period and
- engaging with KNF on questions concerning MiCA, its scope and the application of the framework to current activities.
It should also be stressed that entities providing crypto -assets services who are active in more than one member state under local applicable law must continue complying with all applicable laws until the end of the transitional period.
Naturally we will be pleased to support you during the implementation of MiCA and ACA regulations in Poland and transitional phases.
