Poland’s crypto regulation bill vetoed by President Nawrocki for third time

Polish President Karol Nawrocki has blocked a cryptocurrency regulation bill for the third time, saying the government ignored nearly all of the changes his office proposed during months of legislative back-and-forth. 

The veto leaves Poland as the only EU member state without a national framework implementing the bloc’s Markets in Crypto-Assets (MiCA) rules. The EU rule has a July 1 compliance deadline, which is less than three weeks away, placing Poland in a difficult position in the bloc.

Why is the Polish president rejecting the crypto regulation bill?

Nawrocki returned the bill to parliament with a message that carried the same objections he raised in his first veto last November and his second in February. He cited overregulation, excessive powers granted to Poland’s Financial Supervision Authority (KNF), and insufficient consumer protection as his reasons.

“Bad law does not become good law simply because it is passed a hundred times,” Nawrocki said in a video posted to X. He added that only one of 16 modifications his office submitted had been adopted by lawmakers.

The president said he would sign the legislation if parliament incorporated his remaining proposals, which include stronger judicial oversight of regulatory actions, shorter periods for freezing crypto accounts, and expanded state liability when accounts are frozen unlawfully. 

Parliament, also known as the Sejm, rejected all of those during the bill’s most recent passage in May. 241 deputies in the Sejm voted in favor and 200 voted against.

Nawrocki stated that he is in support of regulating the crypto market. He also added that he supports consumer protection, but for him it must be done effectively. He said, “The bill will be signed into law if it is amended.”

What is the Polish parliament’s reaction?

Prime Minister Donald Tusk responded within hours on X, questioning the president’s motives. “He’s probably more implicated in this than anyone thought,” Tusk wrote, without offering specifics.

Speculators are connecting the prime minister’s comment to the collapse of Zondacrypto, a Polish-founded exchange registered in Estonia, and the ongoing investigation of the platform over suspected fraud and money laundering affecting an estimated 30,000 customers who lost at least 350 million zloty (over $95 million).

Tusk previously accused Zondacrypto of sponsoring conservative political events, including a CPAC conference in Rzeszów where Nawrocki received an endorsement during his presidential campaign. 

Citing Poland’s domestic intelligence agency ABW in April, Tusk alleged that the Zondacrypto CEO made donations to foundations that are linked to opposition politicians and added that the platform had connections to Russian organized crime.

Nawrocki dismissed those allegations, saying they relied on unverified information from a person accused of involvement in organized crime. “Government-controlled agencies, instead of verifying the credibility of the informant, decided to use the story to attack political opponents,” he said.

What are the provisions of the crypto regulation bill?

If the president had signed the bill into law, the KNF would have been designated as the primary regulator of the country’s crypto market.

Under its provisions, the authority could sanction crypto firms, block fiat or digital-asset accounts, and suspend transactions for up to 96 hours, with possible extensions to six months. The KNF would also maintain a registry of websites suspected of fraudulent crypto activity.

Critics from the right-wing opposition and parts of the crypto industry say that these powers go well beyond what MiCA requires. The nationalist Konfederacja faction proposed an alternative, minimalist approach to transposing the EU rules, but parliament’s Public Finance Committee chose the government’s version as the lead bill in May.

What will happen if Poland fails to pass the legislation before July 1?

The KNF has warned that without legislation in place, Polish crypto companies could lose the ability to obtain licenses required under EU law after July 1. It is not known if there are any special provisions for Poland; however, in the event nothing is done, the domestic market in Poland will then be open only to firms that were licensed elsewhere in the bloc. 

For domestic operators, they may be forced to seek these licenses in other EU countries to keep serving customers. 

Finance Minister Andrzej Domański criticized the veto, writing on X that the president “for the third time chose not to stand on the side of the financial security of Poles.”

Tusk and the other members of parliament now have to go back to the drawing board and try to make this bill work. However, he also faces an uphill task of convincing everyone in the house to buy in on the bill. 

Tusk has tried to override the presidential veto and failed. An earlier override attempt in April fell 20 votes short, with 243 lawmakers voting against the veto versus the 263 required.

Should Tusk call for another vote to override the president’s veto, it is still certain that they will get the required number of supporters.