Polish Law Firm Flags Lack of Safeguards for Bitcoin Consumers

Jaroslaw Adamowski
Jul 15, 2014 at 13:51 UTC
Updated Jul 15, 2014 at 14:17 UTC

A recent report by Polish law firm Wardyński & Partners calls for new regulation to protect users of digital currency in the country.

Under current Polish law, the report states, the legal protection of digital currency users is minimal and relies predominantly on the application of general regulations in civil law.

Consequently, these users cannot benefit from the legal acts that defend the rights of those using traditional payment methods, such as Poland’s Payment Services bill or the Act on Financial Instruments in Trading.

The report adds:

“For us, new technologies are all about new legal challenges. In many instances, we must tackle [the] doubts surrounding the legal treatment of innovative products and services or an absence of relevant regulations.”

Legal parity with fiat

Addressing the varying legal protections across different currency services, the report argues that cases of digital currency theft should hold the same legal repercussions as those involving fiat currency:

“The possibility of applying selected provisions of the Penal Code to ‘theft’ of bitcoin demonstrates that in the area of criminal law, legislative intervention to protect the growing number of users of virtual currencies is urgently needed.”

The authors call this legal variance “disturbing” and suggest that article 267 §1 of the Polish Penal Code, which penalises individuals for obtaining unauthorised access to information, should also apply to cases of cryptocurrency theft.

“The economic meaning of ‘theft’ of virtual currencies is identical to the theft of legal tender or a payment card,” the report continues. “But theft of virtual currencies as such is not punishable.”

Poland’s hacking attacks

Like many other nations, Poland has seen its share of security breaches, hacking attempts and theft over the past few months.

As earlier reported by CoinDesk, Poland’s digital currency exchange Bidextreme.pl was hacked in November last year, with customers’ bitcoin and litecoin wallets emptied. Four months later, Poland’s leading bitcoin exchange Bitcurex temporarily shut down its website following a hack that targeted funds in its bitcoin wallets.

Company representatives told CoinDesk that the decision to temporarily close the platform would allow its IT team to “perform a necessary verification”.

Bitcurex resumed service on 18th March, announcing that the perpetrators did not manage to break its security measures or gain full access to its operational hot wallet. However, the two incidents were likely to leave some of the country’s bitcoin users worried about the safety of their cryptocurrency.

Bitcoin and VAT

Last week the Polish finance ministry issued a statement clarifying that while bitcoin is not recognized as an official currency in the country, it can be used as a financial instrument. However, the country’s ambiguous digital currency taxation guidance remains subject to a wide range of interpretations by public institutions.

The report argues that digital currencies require a tailored tax solution, specific to their needs:

“Under current law, users of virtual currencies are exposed to a particular tax risk. The lack of regulations specifically addressing [digital currencies] means that [fiscal interpretations] of operations involving virtual currencies are derived from general regulations, which are ill-suited to the nature of such operations.”

It concludes that cryptocurrency trading should be exempt from the value-added tax in Poland, or “at least be considered”.

Headquartered in Poland’s capital city, Wardyński & Partners is one of the largest independent Polish law firms, with offices located in Poznań, Wrocław, Kraków and Brussels.

The firm’s practice is focused on numerous areas, including EU law, tax disputes and technology, according to data released by the company.

Warsaw image via Shutterstock

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