For an extended period, Bulgaria has maintained a cautious stance towards cryptocurrencies, lacking specific regulations or extensive discussions about their status.
The Bulgarian National Bank (“BNB”) and the Bulgarian Financial Supervision Commission (“FSC””) have yet to classify cryptocurrencies as financial instruments or electronic money, allowing them to remain unregulated and not deemed illegal. The lack of a defined regulatory framework has led to no special licensing regime for establishing a crypto asset entity in Bulgaria.
Thus, the widely used term "crypto license in Bulgaria" refers to an additional registration requirement with the National Revenue Agency (“NRA”) in Bulgaria, rather than a distinct licensing process. This registration enables entities to engage in various crypto-related activities, including cryptocurrency exchange, custody services, wallet provision, crypto payment services, and crypto advisory services given a way for a “Bulgarian crypto license” in the industry.
Bulgaria's regulatory approach to cryptocurrencies has largely followed the guidance of the European Central Bank. The BNB expressed concerns about the inherent risks of buying virtual currencies in 2018, highlighting their extreme price volatility and potential pricing bubbles. The FSC echoed these sentiments in 2022, issuing warnings about the volatility and unregulated nature of crypto investment funds.
Despite the absence of specific regulations, cryptocurrencies in Bulgaria are indirectly regulated by measures aimed at preventing money laundering. In 2019-2020 the Measures Against Money Laundering Act in Bulgaria (or well-known “MAMLA”, in Bulgarian “Закон за мерките срещу изпирането на пари”) introduced the first legal definition of cryptocurrencies in Bulgarian legislation. It defines "virtual currencies" as digital representations of value accepted by individuals or entities as a medium of exchange, without being issued or guaranteed by a central bank or public body. Based on the 5th Money Laundering Directive (Directive (EU) 2015/849) MAMLA also implemented the definition of “wallet provider, offering custodial services” is defined as “a natural or legal person, or other legal entity, providing services for the protection of private cryptographic keys on behalf of its clients for owning, storing and transferring virtual currencies” Further referring to these concepts the Additional Provisions of Ordinance No. Н-9 of 7 August 2020 in Bulgaria, established requirements to crypto-asset exchanges and custodial wallet providers to register in a public register maintained by the NRA in Bulgaria. This created a so-called “cryptocurrency license in Bulgaria”.
Upon registration, companies receive a crypto-certificate or crypto-license, the only state-issued document allowing them to provide crypto-related services.
In summary, Bulgaria's regulatory landscape for cryptocurrencies remains open, recently a registration process replaces a formal licensing regime. The position on unregulated status of cryptocurrency activity is confirmed in court practice and opinions of BNB and FSC in Bulgaria. There are no specific crypto-currency or fintech law that regulated this shpere. The country's approach aligns with preventing money laundering, ensuring transparency, and promoting responsible crypto-related activities. It is expected that in its further movements towards “crypto license in Bulgaria” regulation the country will mainly follow European Union approach.
Bulgaria crypto license has several advantages, few of which are listed below.
These advantages collectively position Bulgaria as an appealing destination for obtaining a Bulgarian crypto license, attracting businesses seeking a conducive and cost-effective environment for their crypto-related operations.
Despite the fact that crypto activity is not specifically regulated in Bulgaria, there might be situations when certain part of crypto activity falls under the existing licensing rules. Therefore, we could conditionally divide the following types of cryptocurrency licenses in Bulgaria:
Scope of Financial Services: If the crypto-related activities potentially qualify as financial services or be categorized as related to financial instruments, a license from the Financial Services Commission (FSC) might be required.
Understanding the distinct licensing options in Bulgaria is crucial for businesses to align their crypto-related activities with the appropriate regulatory framework, obtaining of respective so-called Bulgarian crypto license and ensure compliance with national and EU financial regulations.
InteliumLaw provides comprehensive services related to Bulgaria Crypto License.
InteliumLaw stands as a reliable partner for businesses seeking to establish and operate within the Bulgarian crypto license ecosystem, offering a comprehensive suite of legal services to navigate the complexities of the regulatory landscape effectively.
Key Elements in Crypto Company Setup in Bulgaria:
KYC Proceedings and Strategic Implementation of AML Measures:
InteliumLaw provides comprehensive assistance to crypto businesses in Bulgaria, guiding them through the intricate processes of KYC proceedings, public register entry, and the establishment of a solid corporate structure. Our focus on AML measures ensures compliance with regulatory requirements and fosters a secure operational environment for crypto-related activities.
The process of obtaining a cryptocurrency license in Bulgaria involves preparation and submission of various documents. The application form, crucial for inclusion in the public registry of entities providing professional services related to virtual currencies, mandates the provision of comprehensive information. The key documents and details required include:
Submitting these documents ensures a thorough representation of the crypto entity in Bulgaria, facilitating a smoother evaluation process for the issuance of a crypto license in Bulgaria. InteliumLaw's expertise in guiding clients through this documentation process streamlines the application journey, ensuring compliance with regulatory requirements.
An obtaining of a crypto license in Bulgaria involves a structured process, ensuring legal compliance and authorization for engaging in cryptocurrency-related activities. The key steps include
Obtain the so-called “Bulgarian crypto license”, also known as the registration certificate, by registering the company with the National Revenue Agency. The registration certificate, issued as an electronic document with a qualified electronic signature, is sent to the registered person via email.
While not a mandatory step for crypto authorization, opening a bank account is very important for the operational setup.
InteliumLaw provides comprehensive assistance throughout this process, ensuring a smooth and compliant journey towards obtaining a crypto license in Bulgaria. Our expertise encompasses guiding clients through legal requirements, facilitating necessary registrations, and ensuring adherence to regulatory protocols.
As already described above, at present, cryptocurrencies in Bulgaria are not subject to specific financial services regulations. Crypto related businesses are subject to authorization with NRA in Bulgaria (so-called “Bulgarian crypto license”). However, the country might be affected with the transposition of the Markets in Crypto Assets (MiCA) regulation.
The regulatory landscape for cryptocurrency services in Bulgaria is not extensive and mostly consists of general AML compliance, consumer protection measures, and data protection considerations. Crypto service providers must navigate these requirements diligently to mitigate risks and ensure legal adherence. Also, upcoming changes should be monitored diligently as the new developments yet to come.
Although Bulgarian tax law doesn't explicitly regulate cryptocurrency taxation, the issued guidance from the tax authorities consider cryptocurrencies as financial assets for tax purposes. Rulings from the Bulgarian tax authorities of 2014 require individuals to pay taxes on gains from the sale of cryptocurrencies as financial assets.
For Bulgarian resident individuals, the taxable capital gain from selling cryptocurrencies is subject to personal income tax at a flat rate of 10%. If the cryptocurrency trading activity is conducted systematically and serves as the main source of income for the individual investor, the gains are taxed as business income at a flat rate of 15%.
Bulgarian resident companies, on the other hand, include any capital gains from the sale of financial assets, including cryptocurrencies, in their corporate income tax base. Corporate income tax is levied at a rate of 10%.
In alignment with the Court of Justice of the European Union's case law, the Bulgarian tax authorities consider the exchange of fiat currency for bitcoins and vice versa as a VAT-exempt transaction. This VAT exemption, however, contributes to the turnover calculation for determining the VAT registration threshold.
The cost of a cryptocurrency license in Bulgaria can vary based on several factors, including the specific services you intend to offer, the scale of your operations, and other individual circumstances. Due to the nuanced nature of licensing requirements and the need for tailored advice, it's recommended to contact a representative from Inteliumlaw for precise information on the cost associated with obtaining a cryptocurrency license in Bulgaria. They can provide personalized guidance based on your business model and requirements.
The timeline for obtaining a cryptocurrency license in Bulgaria involves several steps.
First, the crypto company formation in Bulgaria, usually a limited liability company, needs to be completed, and it is then entered into the public register of the National Revenue Agency. The duration of this process depends on factors such as the timeframe for opening a domestic bank account, which can vary based on management choices (local or foreign).
The Authorization procedure (obtaining of a Bulgaria crypto license) typically takes around 14 days, and the application is processed within this timeframe.
Therefore, considering the crypto company setup in Bulgaria and the subsequent Authorization procedure, the overall process can take between 3 to 6 weeks. It's essential to note that these timelines are approximate and may vary based on specific circumstances and individual factors.
In addition to assisting with cryptocurrency licenses in Bulgaria, InteliumLaw offers a range of additional services to support crypto businesses:
By offering these additional services, InteliumLaw aims to provide comprehensive support to cryptocurrency enterprises holding a 'crypto license' in Bulgaria, ensuring they navigate legal complexities, stay informed about industry changes, and receive expert assistance in accounting matters.
Crypto-related businesses in Bulgaria are not governed by a specific financial services law. However, it's essential to note that certain aspects of crypto activities may fall under the purview of other financial licenses regulated by the Financial Supervision Commission (FSC) in Bulgaria. Holders of a 'crypto license in Bulgaria' are subject to general Anti-Money Laundering (AML), Know Your Customer (KYC), and consumer protection regulations.
No, all processes for Bulgarian crypto license could be done remotely.
Crypto businesses holding a 'crypto license' in Bulgaria are obliged to adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. The requirements include:
These measures are crucial to ensuring compliance with AML/KYC regulations and preventing illicit financial activities within the cryptocurrency space.
InteliumLaw employs a comprehensive approach to ensure legal compliance throughout the crypto licensing process for crypto businesses in Bulgaria. Our strategies include:
Yes, the foreign residents are not prohibited from a crypto company formation in Bulgaria.
A crypto company that obtained a so-called “cryptocurrency license in Bulgaria” (i.e. authorized by NRA) can conduct crypto activities in Bulgaria.
The accumulated experience and tracking of future changes in this area allow us to be proactive
for our clients and develop the most adapted business structures to modern conditions.