Czarnecki - legal aspects of new technologies

Last year I proposed that Poland should take a broader approach to the issue of regulatory sandboxes, not merely copying solutions adopted in other countries. Now we see the first steps towards creation of multi-sectoral (not exclusively financial) regulatory sandboxes.

The trend started by the Financial Conduct Authority in the UK of creating regulatory sandboxes for the financial sector has spread around the world, including Poland. Although many voices from major jurisdictions, such as the United States and Germany, are skeptical, this solution undoubtedly has its advantages. Market participants usually rate this concept very highly, even if in reality the sandbox does not deliver immediate regulatory benefits (for example, it does not enable limited operation of regulated activity without a licence, which would be difficult in EU member states due to the harmonised regulatory regime).

Financial technology (FinTech) has been one of the hottest technology areas for several years. It has attracted much attention in Poland as well, particularly due to the successes to date of local FinTech start-ups.

This topic picked up additional steam when a financial innovation working group was appointed at the Polish Financial Supervision Authority (KNF), and then the FinTech Department was opened at the KNF Office. With its Innovation Hub programme, the department has contributed to creation of a positive atmosphere around FinTech in Poland.

The discussion about the legal status of tokens and, in particular, whether and when a token is a security or other financial instrument, is still gaining momentum. There are more and more proposals around this discussion that resolve this issue at the outset, recognising that tokens are intended to become securities. These are so-called security tokens, and the issues are sometimes called security token offerings (STOs).

Regulatory sandboxes usually focus on financial regulations. However, these are not the only obstacle holding back innovative fintech start-ups. More extensive sandbox solutions that also cover data protection issues could make Poland a pioneer on the attractive global market supporting fintech.

The legal status of cryptocurrency is particularly important not only for the so-called crypto space, but also for the future of development of blockchain technology. Recent EU legislative proposals classifing “virtual currencies” as financial instruments might significantly reduce blockchain activity in Europe.

Anti-money laundering (AML) is the first area of Polish law where the parliament has adopted regulations directly related to cryptocurrencies and some other types of crypto-assets. We have devoted a lot of articles to this issue on the blog.

The direction of changes in the Polish law concerning AML results from the development of a global approach to this issue. Mostly this is due to the work of the Financial Action Task Force. FATF is an intergovernmental organisation authorised to create and assist in the implementation and monitoring of anti-money laundering standards, financing of terrorism and financing of the proliferation of weapons of mass destruction. The EU and Polish legislative work on revision of the AML regulations is based on the models presented in FATF publications from 2014 and 2015.