Poland’s premier financial regulator Financial Supervision Authority (KNF) said that cryptocurrency transactions are legal in the country. The agency claims that no specific rule exists in their current legal system that prohibits the use, trade, or business in digital currencies.
However, the Polish government is looking forward to taxing virtual currencies, which were earlier categorized as “property.” Details of the new law will be revealed when their new tax code comes into effect on July 13.
Poland’s Haphazard Relationship With Digital Currency
The European nation is often in the news in the crypto circles because of its haphazard treatment of digital currencies. It first received widespread criticism for taxing digital coins at an unusually high rate.
Traders would have to pay anywhere between 18% to 32% tax on their transactions, regardless of profit or loss. Not only this, as digital coins were considered “assets,” buying or selling them would involve a transfer of property rights that would bring another 1% tax.
Traders would often pay more money in taxes than their initial investment. The country, later, turned around the decision.
The (Un)Necessary Efforts by the Central Bank
Before this, the anti-crypto stance of the Polish central bank, Narodowy Bank Polski (NFB), landed it in a huge controversy. The bank paid a YouTube partner network called Gamellon to discredit cryptocurrencies and spent an amount equivalent to $27,100 on the same.
The bank admitted having engaged in this aggressive social media campaign that left users in the country shocked. Banks often urge users to be careful while dealing in an unregulated space. However, the bank went a step ahead and did the unthinkable.
Ironically, the government authorities also launched a campaign to help their citizens understand the nuances of these virtual coins, especially the risks involved in trading them. The campaign, clearly, underlines the lack of regulation in the space, which could lead to grey areas where investors could be exploited.
The New Tax Code and the Way Forward
The KNF website terms digital currencies “legal on the territory of the Republic of Poland,” as no laws are prohibiting the use of the same. However, the regulator has noted that it would bring the currencies under the purview of their AML and counter-terrorism laws.
The new act will come into effect on July 13. After which, several entities will be labeled as “obligated institutions.” Though there is no explicit mention of crypto exchanges and companies, it is likely that they would eventually fall under this category.
It is clear, by now, that the country will remain hostile territory for Initial Coin Offerings (ICO). In May, The Ministry of Finance also updated the tax laws of the country saying that they want to conduct an “in-depth analysis” of this sector.
Meanwhile, BitBay, which is the largest crypto exchange in the country dealing in 29 currencies and over $9 million market cap, is moving to Malta because of friendlier regulations. This could be a good time for the nation to decide what direction it wants to go with its crypto sector.
