New regulations regarding the operation of entities in the cryptocurrency industry will come into force on October 31, 2021. In practice, they will primarily apply to cryptocurrency exchanges and exchanges. The amended Act on Counteracting Money Laundering and Terrorism Financing of March 1, 2018 (hereinafter referred to as the Act) requires entities providing the following services to be entered in the register of virtual currency businesses:
- exchange between virtual currencies and means of payment,
- exchange between virtual currencies,
- intermediation in the exchange referred to in the points above,
- maintaining accounts that provide authorized persons with the ability to use virtual currency units, including conducting transactions for their exchange.
The application for entry in the register should include:
- name and surname or name (company),
- the number in the register of entrepreneurs in the National Court Register, if such a number has been assigned, and the tax identification number (NIP),
- indication of the services provided in the field of virtual currencies,
- qualified electronic signature, trusted signature or personal signature of the applicant.
In addition to submitting an application with the above data, several other important requirements will also need to be met. Individuals wishing to conduct the business activity described above will be required to have no criminal record for the offenses specified in the Act. This applies in particular to intentional offenses against the administration of justice or economic activity, as well as tax offenses. Another requirement is the need to complete a training course or course covering legal or practical issues related to virtual currency activity, or to have performed activities related to virtual currency activity for a period of at least one year. However, at present, there are still no guidelines regarding training requirements, the method of confirming completion, or the form of a document certifying the fact of conducting business for the appropriate period. Fulfillment of this requirement would seem to be ensured by presenting a training diploma, which will be conducted by a reputable law firm or company specializing in cryptocurrency.
It's important to note that entities already operating in the cryptocurrency industry on October 31st of this year will have six months to comply with the new regulations. This time should be sufficient to complete the necessary training and documentation.
It's worth adding that entities operating in the scope indicated above have been obligated institutions under AML regulations since 2018, which entails, in particular, the obligation to apply financial security measures, such as determining and verifying customer identity. When fulfilling registration obligations, it's certainly worthwhile for each entity to verify whether it has met the requirement to update its risk assessment, which, according to the Act, should occur at least every two years. In addition to changes related to business registration, the list of transactions for which cryptocurrency entities will be required to comply with the Act has been expanded. This includes the obligation to apply financial security measures when conducting transactions involving virtual currency equivalent to €1,000 or more.
The changes introduced could be criticized for not fully addressing the specifics of the industry or for being somewhat imprecise. On the other hand, however, the attempt to legally regulate relations in this industry is worth appreciating, as a complete lack of regulation is often detrimental to entities operating in a given economic sector.
This alert is for informational purposes only and does not constitute legal advice.
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