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Cryptocurrencies have been gaining popularity for several years. The most valuable cryptocurrency, Bitcoin, has been around since 2009. During this time, the value of one bitcoin has risen from a few cents to around $120 000 (more than €100 000).
Cryptocurrencies originated as an alternative to state-controlled currencies and financial systems, but these innovative financial products have hit the mainstream – attracting the interest of investors, financial institutions and legislators.
MiCA. European directive on cryptocurrencies
In the European Union, the status of cryptocurrencies has been regulated by the MiCA (Markets in Crypto-Assets Regulation) directive, which introduces, among other things, mandatory wallet segregation for cryptocurrency exchanges, i.e. the separation of cryptocurrencies belonging to customers from those belonging to the company, as well as mandatory audits, registration fees for companies in the industry and the so-called travel rule, a system that allows the sender and recipient of a cryptocurrency transfer to be verified. All this, experts say, brings cryptocurrencies closer to the banking world.
«The MiCA was created over a five-year consultation process between representatives of regulators, governments and business. These are well-designed regulations,» said Przemyslaw Kral, CEO of crypto exchange Zondacrypto. As he points out, the recently passed laws regulating cryptocurrencies in the US are also largely modelled on the MiCA Directive.
«This proves that European regulation is not a bad thing, it is not over-regulation. Our industry needs to be regulated, it just needs to be done sensibly and efficiently. We are applying for a MiCA-compliant licence in Estonia and Cyprus. In Poland, we cannot, because there is still no law, only a draft,» he added.
The lack of a law, or at the same time the inability of a cryptocurrency company to register its operations in Poland, is not the only problem highlighted by the industry and experts. The proposed draft Polish law is stricter than the European directive.
«The implementation of the MiCA regulation in Poland is a textbook example of overregulation and gold plating. The proposed draft carries the risk of stifling innovative young Polish fintech companies,» believes Piotr Palutkiewicz, vice president of the think tank Warsaw Enterprise Institute.
In his opinion, the Polish draft introduces fees that are too high, based on the value of the issue, which will make some areas of the cryptocurrency business unprofitable.
«Companies planning their growth on stablecoin issuance will simply close down their operations in Poland, while others will move abroad, de facto offering their services to Polish consumers in the grey market, but outside the Polish legal order and supervision.
«If there are to be fees, they should be linked to real profits. The length of the transition period is another objection. The current 4-9 months is not enough for companies to adjust,» Palutkiewicz said.
An example of a company with Polish roots that has decided to expand in another EU country is Zondacrypto, one of Europe’s largest cryptocurrency exchanges, popular in Italy, Romania and Bulgaria, among others. Although 80 per cent of the company’s 200 employees are Polish, and Poland remains its largest market, the business is registered in Estonia.
«In Estonia, the red carpet has been rolled out in front of us, and in Poland we are being thrown a curveball. Cryptocurrencies could become a Polish export commodity, but the political will is lacking. The problem is a lack of knowledge and willingness to educate, politicians prefer to rely on harmful stereotypes about the crypto industry. The Polish regulator, unfortunately, sees cryptocurrencies as a threat rather than an opportunity,» said Kral.
«Meanwhile, we have a society that is very open to cryptocurrencies, we have great specialists. And it will end up that these companies will move out of Poland under the jurisdiction of other regulators and pay taxes in other countries,» he added.
Zondacrypto in Estonia has already paid more than €6 million in VAT. «I think Poland is missing a big development opportunity,» Kral said.
Will Europe lose out in the cryptocurrency race?
Kral believes cryptocurrencies are currently growing fastest in Asia, with the US recently imposing a big pace. But the industry is also growing in Europe, and in a very steady way.
EU regulations were supposed to make the entire European market a coherent universe, but it turned out that there are countries such as Poland and Belgium that are delaying the implementation of the common law. Different countries also have different approaches to the European directive. As a result, barriers still exist in the common European market.
«As we have applied for MiCA licences in Estonia and Cyprus, we are now in a transition period and can operate as before. There are already companies in Europe with a licence issued.
«This mainly concerns entities registered in Malta, which has become a bit of a ‘McDonald’s of licences’. Personally, I find it hard to believe that the Maltese authorities are regulating this market exactly as the MiCA regulations require. We have taken the harder route, because for the long-term development of the business we prefer to clash with a more meticulous and restrictive regulator right from the start,» Kral said.
He added, however, that, in the absence of an enacted law, there is no indication of a Polish regulator in the foreseeable future.
