VASP regulation in Bulgaria

Bulgaria is known as a jurisdiction where many Virtual Asset Service Providers (VASP) operate.

So what advantages does Bulgaria offer to VASPs?

Why Bulgaria?

We, at Manimama OU, believe in the following benefits of VASP registration in Bulgaria:

1. Bulgaria has low taxes. The corporate tax in Bulgaria is one of the lowest in the EU at 10%, the personal tax is also 10%, while the dividend tax is 5%.

2. It is easy to obtain VASP authorization. Obtaining VASP authorization in Bulgaria is easier than in most EU countries. Difficulties arise only when incorporating a local legal entity, as the incorporation process requires a personal visit to Bulgaria.

3. Ability to serve the European Union market. The Bulgarian VASP can serve all EU citizens if it a) does not conduct an aggressive marketing campaign, and b) does not directly offer its services to such persons.

4. Number of registered VASPs in Bulgaria. There are many VASPs registered in Bulgaria. As of 5 June 2024, the Bulgarian VASP register contains information on 305 companies that have ever received VASP authorization.

5. Verification of VASP customers from the amount over 1000 euros. VASPs in Bulgaria are not obliged to verify customers if the amount of deposit, withdrawal, transaction, or exchange is less than 1000 euros, but it should be noted that this applies to customers with whom no business relations are established (the company itself decides in which cases business relations are established, so in practice, it may be speculative).  

Briefly on Regulation of VASPs and Crypto in Bulgaria

VASPs and Crypto in Bulgaria are regulated by the Law on the Measures Against Money Laundering (AML/CFT Act). Meanwhile, the following state authorities act as regulators:

1. National Revenue Agency (NRA). The NRA’s main task is to administer taxes and assessments, other public and private government receivables, and oversee gambling and VASPs. NRA verifies the application for authorization as VASPs, enters companies into the VASP register, and issues confirmation certificates.

2. Bulgarian State Agency for National Security. It regulates VASPs with respect to the enforcement of the AML/CFT Act.

According to the AML/CFT Act, a VASP is a legal entity or person who has received VASP authorization and carries out at least one of the following activities:

  • providing exchange services between virtual currencies and recognized currencies without gold backing (BTC/ETH/NEAR to Euro/Pounds etc. and vice versa);
  • providing custodial wallet services (provision of services for storage of virtual assets, in which VASP has access to such assets).

VASPs must be entered into a public registry organized and maintained by the NRA.

To be included in the VASP register, companies must provide, among other things, information about: a) the location and address of the legal entity’s office, b) addresses for postal correspondence, c) the contact person (full name, position, telephone number, email address for correspondence). Such a contact person must be located in Bulgaria.

If all information is submitted and the fee is paid, the NRA officer makes an entry into the VASP register and issues a certificate of registration.

Steps to Obtain VASP Authorization in Bulgaria with Manimama OU

As a standard, We highlight the following steps for obtaining VASP authorization in Bulgaria (this is a universal scope of work, it can be expanded or narrowed down according to the customer’s wishes):

1. Initial communication with Manimama OU

– Negotiating the terms of cooperation;

– KYC/KYB review of a customer;

– Signing of legal agreement with Manimama OU.

2.  Establishment of a company (Limited Liability Company, all the above documents must be notarised and apostatized and sent to Bulgaria)

– Preparatory stage  (providing of: a) power of attorney for representation for our lawyers in Bulgaria, b) information about directors and shareholders, c) the desired company name.), d) finding a person to be the local contact person in case the directors/shareholders of the company are not Bulgarian residents, e) defining activities (quedas) for the company. There may be one shareholder.

– Searching for a company registration address and entering into an agreement with the lessor;

– Creation of a complete set of corporate documents at the notary’s office through our lawyers in Bulgaria and Providing information to the trade and commerce register;

– Opening a bank account to deposit capital. At this stage, the Company Director needs to come to Bulgaria in person for one day in its capital Sofia. This is for identity verification, a kind of AML/CFT check, which is imposed on Bulgarian banks. The minimum statutory capital is 1 euro.

3.  Completion of post-registration requirements

– Submission of information on the beneficial owner(s);

– Obtaining a statement from the commercial register.

4.  Creating AML/CFT documentation and finding a KYC/KYB provider

Creation of AML/CFT documentation that complies with Bulgarian and EU legislation. Depending on the selected service package, up to 14 documents can be created;

–  Finding a KYC/KYB provider.

5.  Applying for VASP authorization and post-authorization requirement

– Filling in the application for VASP authorization with NRA;

– Obtaining a decision on registration of the company as a VASP, entering the company into the VASP register, obtaining a confirming certificate;

– Submitting an application to the Bulgarian State Agency for National Security for the appointment of an AML officer (it must be a resident of Bulgaria, it can be the same contact person as for the company).

6.  Opening a corporate account with EMI, Bank, and/or another VASP

– After VASP registration, We can offer you the service of opening a corporate account with an EMI (Zen, PayDo, etc.) registered in the EU or another VASP (Kraken, Kuna, Whitebit, Bitstamp, Binance, etc.).

The whole process of obtaining VASP authorization in Bulgaria can take from 4 weeks to 6 weeks.

Is it Reasonable to Register a VASP in Bulgaria in the Run-up to MiCA?

MiCA – carries full regulation of virtual assets in the European Union. The Directive sets strict requirements for VASPs.It is expected to come into force at the end of December 2024. 

At the moment, Bulgaria has not yet adopted any regulations aimed at implementing MiCA. If we analyze the new laws that are being negotiated in other EU countries with similar regulations as Bulgaria, e.g. Poland, Czech Republic etc., most of them establish a transitional period for existing VASPs, it should be expected that in Bulgaria the transitional period will also be in force.

Our Offer 

We have experience in registering VASPs in Bulgaria and will be happy to assist you in obtaining authorization. We will accompany you at every step of registration, advising you on every point.

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

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