10 most important facts about cryptocurrencies

20 lipca 2022
/ Wiktoria Ronc

Over the past few years, the digital asset industry has become an extremely popular investment direction. As a result, an increasing number of countries are choosing to formalize the cryptocurrency market. An example in this regard would be the first Law on the Regulation of Virtual Markets in the Emirate of Dubai or the upcoming one at the European level – the Regulation on Crypto-Asset Markets (MiCA). That’s why in this video, together with Maciej Grzegorczyk from kryptoprawo.pl, we will introduce you to 10 things you should know about cryptocurrencies!

 

 

How polish law regulates cryptocurrency market?

 

Provisions for digital assets are mainly found in tax laws. For example, income from trading in virtual currencies is recognized under Article 17 of the PIT Act and income from cash capitals or Article 7b of the CIT Act, which is responsible for capital gains. However, the definition of cryptocurrencies is found in Article 2(2)(26) of the AML Act. Here, however, it should be kept in mind that Polish regulations introduce the term „virtual currency,” which in its scope includes crypto. This means that not every cryptocurrency or token will meet the conditions under Article 2(2)(26) of the AML. 

 

What tax rates are cryptocurrencies subject to?

 

Cryptocurrencies are subject to a tax of 19%. If you trade cryptocurrencies on your own account – you account for capital gains, on which you as an individual pay the mentioned 19%. The same is true for companies also settling on a capital gains basis. On the other hand, p2p trading or providing services as a cryptocurrency exchange, stock exchange or tokenization project,  you may be subject to different rates depending on the characteristics of your business.

 

The settlement of profits from cryptocurrencies must be made only in the annual settlement. Thus, there is no monthly obligation to pay advance tax payments. In this regard, we have a special application that will allow you to quickly and simply meet your obligations to the tax authorities. In addition, you can also contact us to settle in the traditional way.

 

Banks are not in favor of the cryptocurrency market

 

Unfortunately, a frequent topic of articles appearing on cryptocurrencylaw is account’s blockade. Some banks, in the application form when opening an account, directly ask their customers whether they deal with cryptocurrencies. There’s nothing stopping you from keeping an account without disclosing your business profile, but over time you will certainly get asked what exactly you do for a living. With cryptocurrency projects, it is definitely more likely to be safe to use payment institutions or to set up your own. What if the bank has blocked your funds? In addition, it is worth mentioning that accounts belonging to people who engage in trading privately are rarely blocked.

 

Do Polish authorities frequently audit cryptocurrency projects?

 

There are relatively few inspections on cryptocurrency-related activities by, for example, the GIIF or tax authorities. They are conducted even more rarely in the case of individual traders or cryptocurrency projects. In practice, however, if you are involved in tokenization, you are more likely to have the UOKiK (COMPETITION AND CONSUMER PROTECTION OFFICE) initiate proceedings in your case.

 

P2P trading – regulated activity

 

P2P allows exchanging, buying and selling BTC, ETH or other cryptocurrencies between verified blockchain sellers. In Poland, however, this type of activity from October 31, 2021 requires registration in the Register of Virtual Currency Activities. 

 

AML provisions in Poland

 

As a result of the Directive of the European Parliament and of the Council (EU) 2015/849 on the prevention of the use of the financial system for money laundering or terrorist financing, the AML law in Poland began to apply as a consequence. Based on them, as of October 31 in Poland it is necessary to carry out KYC according to Article 35, if the threshold of EUR 1 thousand on an occasional transaction is exceeded. In addition, transactions carried out repeatedly with a given client, may mean entering into a permanent economic relationship and you should then perform KYC with such a client. Another reason may be the suspicion that the funds in question come from a crime, for example. Unfortunately, new regulations will soon be introduced and KYC will be carried out from the first EUR. It should be mentioned that the regulator in Poland is the Polish Financial Supervision Authority (KNF), but it relatively cuts itself off from the cryptocurrency market. 

 

Tokenization in Poland – how does it look?

 

Most projects are not subject to supervision by the KNF, as tokens often do not meet the characteristics of a financial instrument under Article 2 of the Financial Instruments Trading Act. Here, however, you should consider whether Polish jurisdiction will be favorable for issuing your token. In case it can be treated as a financial instrument – it is worth thinking about tokenization elsewhere.

 

Are you planning a tokenization or cryptocurrency-related business?

 

If you have any questions directly related to your business – contact me! Each project needs to be approached on an individual basis. Let’s set up a meeting and work out all the details in this regard. In addition, if you are planning tokenization, we will discuss the usability features of the token and choose a favorable jurisdiction for your project. Feel free to contact us!

 

Autor: Wiktoria Ronc