Bulgaria -- Regulatory Status Regulatory Overview

Bulgaria, as a member state of the European Union (EU), aligns its cryptocurrency and virtual asset regulatory framework with EU directives and regulations. This means its approach is evolving towards a comprehensive one, driven primarily by anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements, and soon by broader market and consumer protection regulations under MiCA.

Regulatory Approach: Evolving Towards Comprehensive

Bulgaria's regulatory approach is currently partial but robust on AML/CFT, with a clear trajectory towards comprehensive market regulation under the EU's Markets in Crypto-Assets (MiCA) Regulation.

• Current (AML/CFT focus): The primary focus has been on preventing money laundering and terrorist financing. Virtual Asset Service Providers (VASPs) are legally required to register and comply with strict AML/CFT obligations.
• Future (Market Regulation): With the upcoming full implementation of MiCA, Bulgaria will adopt a comprehensive framework for the issuance, trading, and provision of services related to most crypto-assets, covering market integrity, investor protection, and financial stability.

Primary Regulatory Bodies

1. State Agency for National Security (SANS) / Държавна агенция "Национална сигурност" (ДАНС):

   • Role: The Financial Intelligence Directorate (FID) within SANS is the primary body responsible for enforcing AML/CFT regulations related to virtual assets. VASPs are required to register with SANS and report suspicious transactions to the FID.
   • URL: https://www.dans.bg/

2. Financial Supervision Commission (FSC) / Комисия за финансов надзор (КФН):

   • Role: As Bulgaria's financial markets regulator, the FSC is expected to be the competent authority for the implementation and supervision of the MiCA Regulation once it fully applies. This will include licensing, supervision of crypto-asset issuers, and crypto-asset service providers.
   • URL: https://www.fsc.bg/

3. National Revenue Agency (NRA) / Национална агенция за приходите (НАП):

   • Role: Responsible for the taxation of cryptocurrency transactions and income.
   • URL: https://nra.bg/

Key Legislation Names and Dates

1. Law for Measures Against Money Laundering (LMAML) / Закон за мерките срещу изпирането на пари (ЗММДТ)

   • Date: Initially adopted in 1998, with significant amendments over the years, notably to transpose EU AMLD5 (Directive (EU) 2018/843) which brought Virtual Asset Service Providers (VASPs) under the scope of AML/CFT regulations.
   • Key Provisions: Requires VASPs (exchanges, custodians, etc.) to register with SANS, implement Know Your Customer (KYC) procedures, monitor transactions, and report suspicious activities. This is the primary national law governing AML/CFT for virtual assets.
   • Reference (Consolidated Text - unofficial but widely used): https://www.lex.bg/laws/ldoc/2135544026 (Lex.bg provides consolidated texts of Bulgarian laws.)

2. Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA)

   • Date: Entered into force on June 29, 2023.
   • Key Provisions: This is an EU regulation, meaning it will be directly applicable in Bulgaria (and all EU member states) without the need for national transposition.
     • Titles III and IV (Asset-referenced tokens and e-money tokens): Apply from June 30, 2024.
     • Other provisions (e.g., authorization of CASPs): Apply from December 30, 2024.
   • Impact: MiCA will create a harmonized regulatory framework across the EU for:
     • Authorization and supervision of crypto-asset service providers (CASPs).
     • Issuance of certain crypto-assets (asset-referenced tokens, e-money tokens, other crypto-assets).
     • Market abuse rules, consumer protection, and operational resilience.
   • Reference: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32023R1114

3. Income Tax Act for Individuals (Закон за данъците върху доходите на физическите лица - ЗДДФЛ) and Corporate Income Tax Act (Закон за корпоративното подоходно облагане - ЗКПО)

   • Date: Ongoing amendments.
   • Key Provisions: Gains from the sale of cryptocurrencies are generally subject to income tax for individuals (10% flat tax on the positive difference between the sales price and acquisition price) and corporate tax for legal entities (10% on corporate profits). The NRA has issued guidance on the tax treatment of crypto-assets.
   • Reference (for ЗДДФЛ): https://www.lex.bg/laws/ldoc/2135502690

Current Stance on Crypto Trading and Exchanges

• Legal, but Regulated: Crypto trading and the operation of crypto exchanges (VASPs) are legal in Bulgaria, but subject to strict regulatory oversight, primarily for AML/CFT purposes.
• Registration Requirement: All entities operating as Virtual Asset Service Providers (VASPs) – including crypto exchanges, custodial wallet providers, and those facilitating fiat-to-crypto and crypto-to-crypto exchanges – must register with the State Agency for National Security (SANS) and comply with the obligations outlined in the Law for Measures Against Money Laundering (LMAML). This includes implementing robust KYC, customer due diligence, transaction monitoring, and suspicious activity reporting.
• No specific licensing (pre-MiCA): Currently, there is no specific licensing regime beyond AML registration for operating a crypto exchange in Bulgaria. However, this will change with MiCA.
• Future under MiCA: From December 30, 2024, crypto exchanges and other Crypto-Asset Service Providers (CASPs) operating in Bulgaria (or serving Bulgarian customers) will need to be authorized by the Financial Supervision Commission (FSC) or another competent authority in the EU, and comply with the full scope of MiCA requirements (capital requirements, organizational requirements, consumer protection rules, etc.).

In summary, Bulgaria's virtual asset landscape is characterized by a strong emphasis on AML/CFT compliance, making it a regulated environment for VASPs. The impending full implementation of the EU's MiCA Regulation will significantly expand this framework, introducing comprehensive market regulation and consumer protection measures, making Bulgaria's approach fully comprehensive by the end of 2024.