With the growing popularity of cryptocurrency trading, entities that exchange cryptocurrencies, commonly known as currency exchange offices, have emerged. Most of them operate in a similar model to traditional currency exchange offices. A customer at such an establishment hands cash to an employee, who, in return, transfers the appropriate funds, at a pre-determined rate, from the cryptocurrency address held by the exchange office to the customer's cryptocurrency address. If the customer wishes to sell cryptocurrency, the reverse process occurs. Of course, there are also entities that offer cashless exchange.
The emergence of this type of business model raises questions as to the possibility of it being subject to supervision of the financial market by the Polish Financial Supervision Authority or supervision by the National Bank of Poland, similar to that applicable to traditional currency exchange offices.
It is assumed that in the vast majority of cases, such activity will not involve supervision by the aforementioned institutions. This is due to the differences between cryptocurrencies and traditional currencies and electronic money.
The main differences that should be pointed out here are the lack of a central issuer authorized by the state, the lack of an obligation to redeem such an asset at the nominal price by the issuer, and the lack of a legally guaranteed ability to cancel liabilities in the event of payment with cryptocurrency.
These characteristics are present in many of the most recognizable cryptocurrencies, such as Bitcoin. They are native tokens that are in no way tied to the value of other rights or goods.
The situation is different for non-native tokens, which are assigned a specific value or incorporate specific rights, as also recently confirmed by the Polish Financial Supervision Authority in its position paper – Position of the Polish Financial Supervision Authority on the Issuance and Trading of Cryptoassets of December 10, 2020 – indicating, among other things, that if a token incorporates an obligation to redeem it or its value is linked to a specific unit such as gold or silver, it may be subject to supervision. However, in the former situation, the token may be considered electronic money, and in the latter, a futures contract or other similar financial instrument.
Therefore, a cryptocurrency exchange office should refrain from making transactions involving this type of cryptoassets to avoid the possibility of being accused of conducting regulated activities without a license.
Another issue is assessing the possibility of supervising the operation of cryptocurrency wallets, a matter addressed by the Polish Financial Supervision Authority (KNF) in 2018. As stated in the Communication on the Operation of Cryptocurrency Exchanges and Exchange Offices published by the KNF on June 6, 2018, a cryptocurrency exchange may be subject to supervision if such an entity provides payment services by maintaining a payment account in the form of a virtual wallet. However, in most exchange offices, a customer wishing to exchange already has a wallet obtained through technology offered by a third-party provider. In such a situation, the exchange office only uses the address provided by the customer; the wallets of both entities – the exchange office and the customer – are managed by external entities.
In summary, most entities providing services related to the exchange of cryptocurrencies for traditional currencies will not be subject to supervision due to the fact that cryptocurrencies, which are typically exchanged in such businesses, cannot in most cases be considered financial instruments. However, when investment tokens are exchanged, the risk of this type of activity being subject to supervision may arise.
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