Poland’s parliament has advanced a sweeping piece of legislation to regulate the country’s crypto industry, setting the stage for one of the toughest regimes in Europe and sparking an immediate backlash from market participants and political figures alike.

On Friday, the Sejm — Poland’s lower house of parliament — voted to approve Bill 1424, the Crypto-Asset Market Act, which will now move to the Senate for review. The legislation introduces strict licensing rules for all crypto-asset service providers (CASPs) and hands sweeping oversight powers to the Polish Financial Supervision Authority, known locally as the Komisja Nadzoru Finansowego (KNF).

Timeline of Poland’s Crypto-Asset Market Act (Bill 1424) as of Thursday (translated by Google). Source: Sejm

The bill aligns Poland’s framework with the EU-wide Markets in Crypto-Assets (MiCA) Regulation, but critics argue it goes far beyond the European standard, creating penalties that could “destroy” the local crypto ecosystem.

Heavy Penalties and Licensing Rules

The proposed law mandates that all CASPs — including exchanges, wallet providers, and issuers — obtain a license from the KNF to operate legally in Poland. Applications will require extensive disclosure, including capital adequacy, corporate structure, risk controls, and compliance with Anti-Money Laundering (AML) standards.

Entities that fail to comply within a six-month transition period would face severe consequences, including shutdowns, fines of up to 10 million Polish zlotys ($2.8 million), and even prison sentences of up to two years.

Critics Warn of Overregulation

The legislation passed with 230 votes in favor and 196 against, a relatively narrow margin that highlights the sharp divide.

Opposition politician Janusz Kowalski of the Law and Justice (PiS) party denounced the measure as “the largest and most restrictive cryptocurrency law in the EU.” Writing on X, he described the text as “118 pages of overregulation” compared to shorter frameworks adopted in Germany, the Czech Republic, and other EU countries.

Source: Janusz Kowalski (X post translated by Grok)

Blockchain advocate and Polish lawmaker Tomasz Mentzen went further, warning that the law risks “the destruction of blockchain and stablecoins” in Poland. He highlighted the KNF’s notoriously slow pace, noting that regulatory applications in Poland take an average of 30 months to process — the longest in the European Union.

Presidential Promises vs. Parliamentary Reality

The backlash comes just months after President Karol Nawrocki campaigned on a pro-crypto platform, promising to resist “tyrannical regulations” and to support blockchain innovation in Poland. His stance helped secure victory in June’s presidential runoff against Rafał Trzaskowski.

Source: Thomasz Mentzen (tweet translated by Grok)

“In Poland, innovations must emerge, not regulations,” Nawrocki pledged in May. “As President of the Republic of Poland, I will be the guarantor that tyrannical regulations restricting your freedom do not come into effect.”

Crypto advocates are now watching closely to see whether Nawrocki intervenes to veto or amend the law when it reaches his desk.

Outlook

If passed in its current form, the Crypto-Asset Market Act would place Poland among the strictest regulatory environments in the EU, a move critics fear could stifle innovation and drive crypto businesses out of the country.

For now, the crypto industry — which includes an estimated 3 million Polish holders of digital assets — is bracing for the Senate debate and hoping the President’s earlier promises translate into action.