How to obtain a cryptocurrency license in Bulgaria

Regulation of the cryptocurrency market is constantly becoming stricter. Nowadays jurisdictions impose high regulatory and risk management requirements on virtual asset service providers.

Despite this, we always manage to find a solution that suits the client. All the time our team provides research of the market and regulations on various markets to find the best jurisdiction. Recently we have made the global overview of the VASP regulation in EEA and ready to share information with our future and existing clients. Today we will look at the features of obtaining a cryptocurrency license in Bulgaria.

Tax Summary:

  1. Personal income tax – 10%
  2. Corporate income tax – 10%

What law/s governs VASP activities?

  1. Закон за мерките срещу изпирането на пари (AML law)
  2. Order of the Minister of Finance on the conditions and procedure for entering into the register of persons providing exchange services for virtual currencies and recognized currencies without gold backing and portfolio providers

What activities are included in VASP services?

According to the Закон за мерките срещу изпирането на пари, measures against ML and TF are mandatory for the following persons (Art. 4):

  1. Persons that, by occupation, provide exchange services between virtual currencies and recognised currencies that are not backed by gold (clause 38). 
  2. Portfolio providers offering custody services (clause 39) – when a natural or legal person or other legal entity that provides private cryptographic key custody services on behalf of its clients for the holding, storage and transfer of virtual currencies.

Who is the VASP regulator?

  1. National Revenue Agency (“NRA”)

What is the procedure for registering a VASP for a local company?

Currently, cryptocurrency business can operate without a license, but it is necessary to register in a special crypto register maintained by the NRA. 

There are several requirements that must be satisfied in order to register a company with the crypto-registry and to obtain a certificate of registration (this is the only legal document issued by a state body in Bulgaria, allowing companies to provide crypto services in accordance with the current legislation) with the crypto-registry in Bulgaria:

  1. An LLC established in Bulgaria (entered into the public register of the NRA) with a minimum share capital of EURO 1.
  2. Company founders need to open a bank account before registering a company.
  3. Company must have one local director who will liaise with the regulatory authorities.
  4. Company must comply with all applicable AML regulations and approve a full set of AML policies individually tailored under the project.

To be entered in the register, legal entities shall submit an application in electronic form (the application form is available at this link or at the end of the above-mentioned order), signed with a qualified electronic signature, which contains:

  1. Name of the company.
  2. Location and address of the legal entity’s office.
  3. Address for postal communication.
  4. An email address for communication.
  5. Details of the person or persons representing the company’s interests.
  6. Contact persons (full name, title, telephone number, e-mail address for communication).
  7. Unique identification code (UIC) of the company, which is indicated in the commercial register.
  8. Information on the opened payment account: account number, name of the payment service provider where the account is opened (one or several accounts can be indicated).
  9. Address of the website or mobile application for the exchange of virtual currencies or digital wallet services.
  10. A description of the activities that the applicant intends to carry out.
  11. A list of countries in which the applicant intends to offer its services.
  12. Information on whether the applicant is a cross-border company or part of a cross-border enterprise.

The registration and the issuance of a registration certificate are carried out within 14 working days from the submission of the relevant application and the accompanying documents.

Is there any specific authorization required for a VASP from another EU member state to provide services in this jurisdiction?

Individuals and legal entities from abroad may apply for Bulgarian cryptocurrency authorization if they are able to demonstrate their ability to comply with AML/CFT regulations.

Foreign VASPs must follow the general authorization rules.

What is the liability for the activities of a VASP from another EU member state without local registration/authorization in this jurisdiction?

According to Art. 116a of the AML law whoever carries out any of the activities referred to in Article 4, clause 38 or 39, without being entered in the register referred to in Article 9a, if the act does not constitute a criminal offense, shall be punished by:

  1. A fine of BGN 2 000 to BGN 10 000 (~ EUR 1 022 to EUR 5 112), where the offender is a natural person.
  2. A pecuniary sanction of BGN 5 000 to BGN 50 000 (~ EUR 2 556 to EUR 25 564)  when the offender is a legal person or a sole trader.

Manimama Legal & Growth Agency provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.