Bulgaria presents a compelling environment for entrepreneurs looking to launch cryptocurrency ventures. The Bulgarian National Bank (BNB) and the Financial Supervision Commission (FSC) maintain a liberal approach toward crypto businesses, allowing them to develop within the existing regulatory framework. Currently, the primary regulations are tied to EU-mandated anti-money laundering directives. However, Bulgaria is expected to adopt the broader EU-wide Markets in Crypto-Assets (MiCA) regulation soon, ensuring greater clarity and consistency.
The upcoming MiCA framework aims to prevent the misuse of crypto assets and services, covering areas such as environmental responsibility, insider trading, stricter oversight of stablecoins, and non-compliant Crypto Asset Service Providers (CASPs). Additionally, the DLT Pilot Regulation, introduced in 2022, provides a legal framework for trading and settling crypto assets classified as financial instruments under MiFID 2.
Advantages of the Bulgarian Jurisdiction
Operating a crypto business in a jurisdiction without specific crypto-focused rules means that existing legislation must be interpreted by qualified legal professionals. This flexibility offers several benefits for crypto entrepreneurs.
Key benefits include:
- Rapid company formation and licensing processes, saving time and resources for business growth
- The entire licensing procedure can be completed remotely without the need to travel to the country
- Low initial capital requirements enable entrepreneurs to launch projects without extensive fundraising
- No obligation to establish a local office or hire local staff, allowing for remote operations
- Minimal application and regulatory fees, freeing up resources for project development
- Bulgaria is a reputable EU member state known for fiscal discipline
- A Bulgarian license provides access to the entire EU market of 27 countries
- The country is open to innovation and technological experimentation
Anti-Money Laundering Measures Act (MAMLA)
The primary law governing crypto businesses in Bulgaria is the Anti-Money Laundering Measures Act (MAMLA). This legislation outlines measures to prevent and detect money laundering activities related to criminal proceeds. It partially transposes the EU’s Fifth Anti-Money Laundering Directive (5AMLD), which introduces additional rules to combat money laundering, terrorist financing, and other financial crimes.
MAMLA formally defines virtual currencies as digital representations of value not issued or guaranteed by a central bank or public authority. These currencies are accepted as a means of exchange, stored and transferred electronically, and managed via crypto wallets. The law mandates that crypto companies establish customer due diligence (CDD) and Know Your Customer (KYC) procedures. Enhanced due diligence is required for transactions exceeding 30,000 BGN (approximately €15,000).
Crypto businesses must identify their ultimate beneficial owners and control structures. They are also required to develop internal policies for monitoring transactions and reporting suspicious activities to the Financial Intelligence Agency.
Consumer Protection Legislation
Consumer protection laws in Bulgaria apply to crypto assets only when they are not used for investment purposes. Crypto companies must adhere to principles of transparency, accuracy, and fairness in their dealings with customers.
Key consumer protection rules include:
- Obligation to provide preliminary information in writing or electronically before offering services
- Prohibition of unfair contract terms and misleading practices
- Clear identification of promotional materials and requiring prior consent for unsolicited advertising
- Right for consumers to withdraw from contracts within 14 days without penalty
- Requirement to notify customers of changes to terms and conditions seven days before implementation
- Right to file complaints with the Bulgarian Consumer Protection Commission
Other Relevant National Legislation
In Bulgaria, crypto assets are treated as commodities rather than financial instruments. Transactions are governed by the Obligations and Contracts Act and the Commercial Act. Disputes are resolved under general claim procedures rather than commercial dispute protocols.
Advertising regulations protect both customers and competitors. Crypto companies must avoid misleading information or comparative advertising that harms competitors. The Personal Data Protection Act (PDPA) aligns with the EU’s GDPR, ensuring robust data handling practices.
Obtaining a Crypto License in Bulgaria
While Bulgaria does not have a specific crypto license, businesses must obtain authorization from the National Revenue Agency (NRA) to operate legally. Unauthorized activities are considered illegal.
Services requiring NRA authorization include:
- Exchange between crypto assets and other crypto assets
- Exchange between crypto assets and fiat currencies
- Custody services for private crypto keys
- Services for holding, storing, and transferring crypto assets
Required documentation includes:
- Detailed descriptions of planned crypto services, websites, and software
- A comprehensive overview of products and services
- List of countries where services will be offered
- Information on cross-border activities
Steps to obtain authorization:
- Register a company in Bulgaria
- Prepare a detailed description of crypto services
- Develop internal AML/CFT procedures per EU directives
- Launch a compliant website and mobile application (if applicable)
- Pay a registration fee of 50 BGN (approximately €25)
- Submit an electronically signed application with required documents
Successful applicants receive a registration certificate within one month, allowing them to offer crypto services in Bulgaria. Companies must report any changes to the NRA to keep records updated.
Registering a Company in Bulgaria
Bulgarian companies are governed by the Commercial Act, which outlines legal structures, registration processes, and capital requirements. The limited liability company (LLC) is a popular choice due to its flexibility and low initial capital requirement of 2 BGN (approximately €1).
Key steps for company registration:
- Choose a company name and secure a registered address (virtual offices are acceptable)
- Appoint at least one executive director (no nationality or residency requirements)
- Prepare documents including company statutes, identification copies, and bank statements
- Submit the application to the Commercial Register
The national fee for company registration is 55 BGN (approximately €28). The process typically takes up to two months.
Taxation for Crypto Businesses
Crypto companies in Bulgaria are subject to a corporate income tax rate of 10% on profits generated from commercial activities. A 5% withholding tax applies to dividends distributed to shareholders.
Social security contributions total 24.3%, split between employers (13.72%) and employees (10.58%). National health insurance contributions are 8%, with employers paying 4.8% and employees 3.2%.
Companies with turnover exceeding 50,000 BGN (approximately €25,600) over 12 months must register for value-added tax (VAT). While many crypto-related activities are subject to the standard 20% VAT rate, cryptocurrency exchanges are exempt as they are considered equivalent to financial services.
Bulgaria has double taxation treaties with about 70 countries, helping businesses avoid duplicate tax burdens.
Reporting Requirements
Companies must comply with the Accounting Act and the Independent Financial Audit Act. Crypto holdings must be reported in annual financial statements, though they are not included in tax returns.
Audit exemptions apply if a company does not exceed two of the following parameters:
- Total assets: 2 million BGN (approximately €1 million)
- Total revenue: 4 million BGN (approximately €2 million)
- Average number of employees: 50
Frequently Asked Questions
What is the process for obtaining crypto authorization in Bulgaria?
The process involves registering a company, preparing detailed service descriptions, developing AML/CFT procedures, and submitting an application to the NRA. Authorization typically takes up to one month.
Are there any capital requirements for starting a crypto business?
The initial capital requirement for a limited liability company is as low as 2 BGN (approximately €1). There are no additional regulatory capital requirements for crypto businesses.
How are crypto assets taxed in Bulgaria?
Crypto businesses pay 10% corporate income tax on profits. Crypto exchanges are exempt from VAT, but other services may be subject to a 20% VAT rate.
Is a physical office required to operate a crypto business in Bulgaria?
No, there is no requirement for a physical office or local staff. Businesses can operate remotely using a virtual office address.
What are the reporting obligations for crypto companies?
Companies must submit annual financial statements and report crypto holdings. Audit requirements depend on the company’s size and revenue.
How does Bulgaria’s regulatory framework compare to other EU countries?
Bulgaria offers a streamlined and cost-effective regulatory environment. Its upcoming alignment with MiCA will further harmonize regulations with other EU member states.
For entrepreneurs seeking a straightforward path to launching a crypto business, Bulgaria offers a compelling combination of low costs, regulatory flexibility, and EU market access. 👉 Explore more strategies for regulatory compliance to ensure your venture thrives in this dynamic industry.