To keep up with the highly technological and rapidly changing cryptocurrency market, you have to understand that Virtual Asset Service Providers (VASPs) are crucial for storing and exchanging virtual assets. Cryptocurrency exchanges and wallet providers are essential parts of the decentralized ecosystem since they help users buy, sell, and manage digital assets.
The cryptocurrency market’s development is mirrored in the worldwide progress of VASP legislation. Over time, laws have broadened their focus to include issues like consumer protection and market integrity, in addition to their original intent of combating illegal activity like money laundering and terrorist funding. Regulators throughout the globe are constantly adapting their policies to account for the particular issues posed by the decentralized nature of cryptocurrencies.
VASP in Poland
Poland has aligned itself with the legislative framework of the European Union as of November 1, 2021, by embracing effective and transparent crypto legislation. In Poland, the General Inspector of Financial Information (GIIF) is in charge of supervising the VASPs, so conformity with national and European Union regulations is guaranteed by that body.
With an emphasis on following the recommendations of the Financial Action Task Force (FATF), Poland’s crypto legislation is in line with worldwide norms. Poland is resolute in its fight against cryptocurrency-related financial crimes, as shown by its compliance with anti-money laundering directives such as the 4th and 5th (4AMLD and 5AMLD). Poland is also showing that it is willing to be proactive in order to remain ahead of changing regulatory needs by being ready for the Markets in Crypto-Assets Directive (MiCA).
Being a VASP in Poland means you have to follow all the rules and regulations. These include having at least one shareholder and one management board member, whether a natural person or a corporate entity. The regulatory framework places no restrictions on citizenship or residence, fostering an inclusive environment for crypto businesses. Further, the registration process involves the disclosure of beneficial owners’ details to the authorities and compliance with the Personal Identification Number (PESEL) and Trusted Profile requirements.
Poland offers a favorable tax environment for VASPs, since services pertaining to virtual currency are not subject to Value Added Tax (VAT). The Corporate Income Tax (CIT) is 19% and the Withholding Tax (WHT) is 19% on gross dividends; nonetheless, both taxes are imposed on corporate earnings.
VASPs often work with crypto-friendly fintech banks that have an Electronic Money Institution (EMI) license for their banking needs. Nevertheless, it is important to mention that conventional Polish banks are now unwilling to work with cryptocurrency businesses, which has led many to seek out other banking alternatives in countries such as Lithuania.
Impact of VASP Regulation on the Crypto Market in Poland
Poland is already a trailblazer in the European crypto scene, thanks to the establishment of VASP laws, which have a major influence on the local crypto industry. According to an examination of EU business registration data conducted by DL News, Poland now has almost double the number of registered crypto enterprises as its next rival, Lithuania.
The simplified application procedure in Poland, which takes just two weeks and costs less than €150, is a major selling point for the country to crypto firms. Poland is a great option for crypto companies looking to establish a foothold in the EU.
Its progressive regulatory climate is one of the main reasons for Poland’s rise to prominence. The MiCA regulation is anticipated to provide much-needed certainty to the EU crypto business when it comes into force in December 2024. Although Poland has more cryptocurrency businesses registered than any other EU state, that might change soon as other countries like France are trying to standardize their registration procedures with MiCA.
Compliance and Challenges for Crypto Projects
In order to be in compliance, crypto projects in Poland that are acting as VASPs have to deal with a maze of regulations. Strict Know Your Customer (KYC) processes, strong AML capabilities, and frequent reporting to financial regulators are crucial components. Integrity serves as a guiding concept throughout the compliance journey, which includes staff training. During this time, the focus is on sharing information and lessons acquired.
Although registering a crypto entity in Poland is not too difficult, there will be obstacles to overcome when MiCA is put into action. Regulatory certainty and the cultivation of connections with financial institutions are essential for the establishment of a flourishing environment for crypto service providers. For crypto ventures in Poland to succeed and last, this is essential.
Case Studies or Examples
A number of cryptocurrency ventures have shown the way for the sector by successfully navigating Poland’s VASP regulations:
- Kriptomat: The Kriptomat platform, run by FintechX OÜ, is listed on the Virtual Currency Business Register in Poland. This achievement demonstrates Kriptomat’s dedication to meeting regulatory requirements, which include anti-money-laundering capabilities, personnel training, and know-your-customer processes.
- WOO Network: WOO Network, with its trading platform WOO X, obtained VASP registration approval in Poland. Thanks to this success, WOO X may now serve Polish users and is even more in line with Polish anti-money-laundering laws.
- Bitrue: The cryptocurrency exchange Bitrue is able to provide its services to customers in Poland after successfully registering as a VASP there. By implementing stricter anti-money-laundering rules and processes that are in line with new Polish legislation pertaining to VASPs, Bitrue has shown its dedication to compliance.
Future Outlook and Developments
As the digital asset market is expected to develop, the future of VASP laws in Poland looks bright. Revenue of €279 million is anticipated in 2023, with a predicted CAGR (Compound Annual Growth Rate) of 11.48% from 2023 to 2027. According to projections, the market will be worth over €431.5 million by 2027 as a result of this expansion.
In 2023, the Polish digital asset market is expected to generate an average of €46.6 in revenue per user, suggesting that the market is highly profitable. Poland is clearly the leader in the region’s digital asset market, with an estimated size about 20 times higher than Estonia’s.
Conclusion
In conclusion, Poland’s VASP regulations position it as a crypto leader in Europe. The nation’s adept alignment with EU standards, inclusive regulatory environment, and streamlined application processes make it an attractive hub. Successful case studies, like Kriptomat and WOO Network, underscore Poland’s commitment to fostering a thriving and compliant crypto ecosystem
Founder Dinis Guarda
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