BULGARIA Law and Practice Contributed by: George Chisuse, Ivelin Vassilev, Stephany Valcheva and Daniel Kolev, VC Law
sional services, marketing, office expenses or technol- ogy infrastructure. The main uncertainties concern classification and valuation. It’s not always clear how a particular token or transaction should be characterised for tax pur- poses, especially in cases involving crypto-to-crypto exchanges. Such transactions are particularly sensi- tive because the NRA’s position refers to both sales and exchanges, which means that a taxable event may arise even where the taxpayer has not converted the asset into fiat currency. In those cases, valuation in euros at the relevant time becomes a practical issue. 1.2.5 Insolvency Bulgaria has not introduced a standalone insolvency or resolution regime for blockchain-based businesses and the general rules on liquidation and insolvency apply, unless they also fall within a specific regulated financial-sector regime. The fact that a business uses blockchain technology does not, by itself, change the applicable insolvency framework. For CASPs, insolvency risk is addressed mainly through MiCA and the Bulgarian Markets in Crypto- Assets Act. The providers are expected to have proper governance, prudential safeguards, business conti- nuity arrangements and clear segregation of client assets. These requirements are important because, if a CASP fails, the client crypto-assets and client funds should be identified and separated from the firm’s own estate. The treatment of client assets is likely to be the most sensitive issue in any CASP insolvency. Where records are clear and assets are properly segregated, clients should be in a better position to claim return of their assets. Where assets have been commingled, held through unclear wallet structures or recorded inad- equately, insolvency proceedings may become much more complicated. This is why custody architecture is not only licensing issues, but also insolvency protec- tion issues. There is no special Bulgarian resolution regime for ordinary CASPs comparable to bank resolution. If the blockchain business is also a bank, payment institu- tion or electronic money institution additional sector-
specific rules may apply. For most CASPs, however, focus is on prevention: maintaining adequate own funds, segregating client assets, keeping reliable records and having an orderly wind-down plan that can be used if the business can no longer continue operating. 1.2.6 Industry and Trade Bodies There are certain industry associations and profes- sional organisations in Bulgaria and at EU level that bring together participants from the fintech and cryp- to-asset sectors. Their role is to support industry dia- logue, market education, exchange of good practices, and communication with regulators and policymakers. Such organisations do not have the status of formal self-regulatory organisations with formal statutory supervisory, licensing, enforcement or disciplinary powers over crypto-asset service providers. They contribute to the development of market standards and policy discussions, but regulatory supervision remains with the competent public authorities. At EU level, the adoption of MiCA has further har- monised the regulatory framework for crypto-assets across member states and has facilitated a more inte- grated European market. This allows industry partici- pants from different EU jurisdictions, including Bulgar- ia, to engage in common regulatory discussions and participate in cross-border industry initiatives under a shared EU framework. Accordingly, while industry bodies may play a useful representative and consultative role, they should not be regarded as a substitute for regulatory authorisa- tion. 2. Regulation 2.1 Regulators and International Alignment For a crypto or blockchain business in Bulgaria, the relevant regulator depends less on the technology itself and more on what the business is actually doing and the services it provides. There is no single block- chain regulator supervising every blockchain-based activity.
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