Poland, Turkey enact strict new crypto laws

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A new bill that imposes onerous requirements on virtual asset service providers (VASPs) in Poland and prescribes up to two years in prison for violators has received widespread criticism from political leaders and industry leaders.

Elsewhere, Turkey’s financial industry watchdog could be granted the authority to freeze ‘crypto’ accounts suspected of engaging in illegal activity.

Poland’s ‘anti-innovation’ bill

The lower house of the Polish parliament, known as the Sejm, recently voted 230-196 in favor of the Crypto-Asset Market Act, the country’s implementation of the European Union’s Markets in Crypto-Assets (MiCA) framework.

The draft now heads to the Senate for a vote before it lands on President Karol Nawrocki’s desk for signature.

The Act hands regulatory authority over the industry to the Polish Financial Supervision Authority, known locally as the Komisja Nadzoru Finansowego (KNF). The watchdog will oversee stablecoin issuers, VASPs, and trading platforms, focusing on market integrity, preventing market abuse, and protecting investors.

To obtain the license, VASPs must prove they have adequate capital and outline their corporate structure, compliance systems and risk control measures. Operating VASPs will have a grace period of six months to obtain the new license once the Act is signed into law.

Licensed VASPs must prove that their employees have financial knowledge, implement stringent Know Your Customer (KYC) and anti-money laundering (AML) programs, and segregate their funds from the clients’. In case of failures or bankruptcies, the regulator can order a VASP to transfer user assets to another platform.

Digital asset firms that violate the new Act could face fines of up to $2.8 million or a prison term not exceeding two years.

United against the bill

The bill has been heavily criticized in Poland and beyond. Przemysław Kral, the CEO of zondacrypto, an exchange founded in Poland but now based in the friendlier Estonia, described the framework as “a major step backwards, and a prime example of overregulation.”

“These new rules could criminalise basic activities like smart contract development, which risks stifling innovation. Companies will relocate to friendlier markets, taking jobs and tax revenue with them.”

The Act also received criticism from some local politicians, many of whom had voted against it at the Sejm.

Janusz Kowalski, a member of the Sejm and a former Minister of State Assets, tore into the overly prescriptive framework, which he says will kill Poland’s budding digital asset industry. The Act is 118 pages long, by far the largest interpretation of MiCA across the EU; for comparison, Germany’s equivalent framework is 78 pages long, while those of the Czech Republic, Romania, Hungary, and Romania are all less than 15 pages long.

“This shows the scale of absurdity from [Prime Minister] Tusk’s team, which is blocking the development of crypto assets in Poland by wanting Poles to keep their savings outside Poland,” he stated.

President Nawrocki might be the digital asset sector’s best bet against the new framework. According to the Warsaw-based law firm Dudkowiak & Putyra, there have been indications that he is likely to veto the Act and present his own version, which is expected to be more favorable.

Turkey to freeze ‘crypto’ accounts

Meanwhile, the Turkish government is preparing a new draft bill that would hand its financial regulator the power to freeze ‘crypto’ accounts involved in illicit activities.

The proposed changes will be introduced to parliament in a new bill in the coming weeks, sources familiar with the matter told Bloomberg.

The bill is part of the country’s efforts to clamp down on financial crimes such as money laundering and to align with recommendations from the Financial Action Task Force (FATF). Turkey was removed from the FATF’s grey list of countries last year, three years after it was added due to shortcomings in its AML standards.

The proposed changes would allow Turkey’s Financial Crimes Investigation Board, known locally as MASAK, to freeze and shut down accounts suspected of engaging in illegal activities on ‘crypto’ platforms, banks, electronic money institutions, and payment firms.

Sources say the new bill is intended to curb ‘account renting,’ in which criminals use people’s accounts to move funds for a commission.

Digital asset adoption has skyrocketed in recent years, with nearly one in five Turks owning digital assets last year, the third-highest rate globally after the United Arab Emirates and Singapore. Additionally, 99% of Turks say they had heard of digital assets, a sharp rise from 16% in 2020.

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