2021 02 11_Blockchain_EN

Blockchain – a revolution in the financial sector?

15 February 2021 | Knowledge, News

Will blockchain technology revolutionise the financial industry? By 2025, the value of the global blockchain market is forecast to exceed USD 21 billion, and 10% of global GDP is likely to be stored in blockchain, with more and more economic sectors opting to use this technology, including the financial sector. Polish banks are rapidly embracing this new technology and already working on further implementations.

Technology at a glance

What is blockchain? By definition, blockchain is a distributed ledger of transactions across a network that can be accessed and viewed by all network users.

“Blockchain is a special type of database containing an ever-growing volume of information grouped into blocks and linked together. Each subsequent block contains a timestamp of when it was created and a link to the previous block, being an encrypted ‘summary’ of its contents,” explains Piotr Gałka, Attorney at Law, Counsel at Kochański & Partners.

The use of blockchain technology allows analytical and control processes between financial institutions to be carried out in an integrated manner, providing unrestricted access for regulators to examine the system as a whole.

10,000 Bitcoin pizzas

Blockchain technology was used to launch the world’s most popular cryptocurrency at present – Bitcoin. It all started in 2008, when the first document to describe Bitcoin appeared on metzdowd.com. Soon after, the first cryptocurrency mining software was launched. The first-ever recorded Bitcoin transaction was made in the U.S. and involved payment of 10,000 Bitcoins for two pizzas. If the transaction were made today, the pizzas would have been considered to be the most expensive pizzas in the world, being worth USD 300 million (1 Bitcoin is currently valued at USD 30,000).

Bitcoin is a cryptocurrency (digital currency). It has no material form, and there are no regulations in place which would define its functioning. It also differs from traditional currencies in having no central issuing authority, such as e.g. the National Bank of Poland for PLN. Cryptocurrencies are stored on a computer, with their value being dependent on free market forces. It is decided at the system development stage how many coins of a specific cryptocurrency will be in circulation. Bitcoin has a total available supply of 21 million units, and is increasing towards this limit.

Cryptocurrencies can be obtained by “mining” them in person or buying them from a dedicated exchange or marketplace. To put it simply, Bitcoin “mining” is about using computing power to solve math problems. Can this be done at home? – It was possible a few years ago, but today the required computing power is huge and can only be achieved with specialist equipment.

Regulatory background

Despite its growing popularity, blockchain still lacks uniform regulations. From a regulatory perspective, blockchain can be considered in three categories: first – as an interesting option for the banking sector; second – as a technology that has enabled the emergence of a parallel financial market for cryptocurrency assets; third – as a technology setting up a next-gen financial system infrastructure.

From the first perspective, blockchain implementation involves legal aspects typical of introducing new solutions, in particular the processing of data, including data protected by law, which may require meeting requirements for outsourcing, including cloud-based outsourcing.

Blockchain, used in an open source model, has also underpinned the phenomenon of the emergence and growth of cryptocurrencies. The global dispersion of transaction information storage and processing has proven to be an effective way to build an alternative, unregulated financial market for cryptocurrency assets. National regulators are responding to this phenomenon with both interest and great caution. New EU regulations are currently being drafted to transform the cryptocurrency asset market into a regulated market, fully compatible with the existing financial system. The draft Regulation on Markets in Crypto-assets (“MiCA”) is intended to create a legal framework for the functioning of the market, harmonise rules at the EU level and remove existing legal barriers.

The Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT) will be another new piece of legislation. It is intended to enable the financial market players to make use of DLT in a secure legal environment, thus leading to the development of a secondary market for crypto-assets as financial instruments.

Durable medium – a solution to banks’ problems

Blockchain is mainly known as the technology behind Bitcoin. However, its potential is much greater. How can best apply to the banking sector? First of all, blockchain is a response to banks’ legal problems associated with the obligation to provide documents on a durable medium. Banking institutions are required to send information in a form that prevents subsequent interference with the content of documents and enables customers to access them at any time. Electronic banking, according to case law, was not able to satisfy these requirements. Blockchain technology, which made it possible to send documents in a secure and compliant manner, has proved to be the solution.

Are Polish banks ready for blockchain?

There are, however, more applications of the technology in the financial sector. Blockchain can also be used to create an effective and inexpensive settlement system.

 “The existing payment and interbank settlement systems are based on outdated technologies unsuited to the requirements of today’s globalised economy. With the widespread use of blockchain payments it will be possible, among other things, to store and effectively authenticate digital transaction data and create so-called smart contracts,” says Piotr Gałka.

PKO bank was the first in Poland to implement blockchain technology as a system for verifying the authenticity of bank documents, including regulations and fee and commission schedules. Other financial institutions quickly followed suit. Alior Bank used public blockchain for the first time to offer its customers the possibility of authenticating bank documents. ING Bank Śląski also recently announced that it has taken part in a pilot trade finance transaction based on blockchain technology. Co-operative banking is not lagging behind either: in summer 2019, Bank Spółdzielczy in Toruń announced the implementation of a solution based on a distributed blockchain system.

Blockchain has the potential to revolutionise the Polish banking sector. Are banks ready for it?

“This will be seen in the coming years. It is likely that banks will employ this technology to provide innovative services to customers. With blockchain it will be possible to remove the intermediary, and replace this with a reliable, transparent and borderless system available to everyone,” concludes Szymon Ciach, Attorney at Law, Senior Associate at Kochański & Partners.

 

Blockchain in the financial sector – full report

 

Report prepared by Piotr Galka, Artur Bilski and Szymon Ciach.

Latest Knowledge

What EU businesses need to know about foreign subsidies

Just two months after the Regulation came into force, the Commission launched a high-profile investigation into a contract awarded by the Bulgarian Ministry of Transport and Communications for the purchase of electric trains from a major Chinese manufacturer. This was intended to emphasise the EU’s stance on unfair competition and its determination to combat this phenomenon.

Labour law: what lies ahead in 2026?

Changes to the way the length of service is determined, new executive ordinances for foreigners, and new powers for the National Labour Inspectorate are just some of the changes in labour law that will come into force in 2026.

Protecting designs exhibited at trade fairs

How can intellectual property and designs that have already been presented to the public, for example at trade fairs, be protected? All you need to do is exercise your exhibition priority right. This mechanism allows you to file an application for such a design at a later date without affecting its novelty. Let’s see how it works in practice.

Contractual practices prohibited under the Data Act 

One of the key aspects of the Data Act is the introduction of provisions on prohibited contractual practices. These provisions are intended to protect businesses operating within the broadly understood digital industry that have a weaker contractual position.

Those who have data have power. The Data Act redistributes this power

The EU Data Act, which came into force in September 2025, represents a breakthrough in the regulation of data access and use. Data generated by devices, ranging from agricultural tractors and industrial machinery to solar panels and transport fleets, is no longer the sole property of manufacturers. Other market participants now have the opportunity to access and use this data to develop new, innovative products and services. The Data Act marks a departure from business models based on data monopolisation, to one requiring data to be shared in accordance with its rules. We are therefore entering a completely new reality.

KSeF and transfer pricing: a new era of transparency and operational challenges

The introduction of the National e-Invoice System (KSeF) represents one of the most significant challenges for group companies in recent years. Although the KSeF is intended to simplify the invoicing process and reduce tax abuse, it also has a significant impact on transfer pricing, particularly with regard to the documentation and settlement of TP adjustments.

Contributing assets to a family foundation – what to keep in mind

A family foundation is a legal entity whose purpose is to manage wealth effectively and ensure its succession without the risk of dispersing assets accumulated over generations. Therefore, a key issue related to the activities of such an organisation is the contribution of this wealth to the foundation in the form of various types of assets that will work for the beneficiaries. Let’s take a look at what this process involves in practice.

Cloud migration after the Data Act: new rights, lower costs and greater freedom

The Data Act requires a significant change in approach to cloud services. Companies should review their contracts and start planning updates immediately. It is crucial to introduce appropriate switching provisions and remove or renegotiate exit fees. Companies must also prepare their infrastructure, both technically and organisationally, for interoperability and migration in accordance with the new regulations.