BULGARIA Law and Practice Contributed by: George Chisuse, Ivelin Vassilev, Stephany Valcheva and Daniel Kolev, VC Law
The FSC handles CASP authorisation and supervision under the Bulgarian MiCA framework. If the model also includes payments, electronic money, e-money tokens, payment accounts or banking services, the Bulgarian National Bank will also have supervisory authority. Tax treatment and reporting fall within the remit of the National Revenue Agency, while projects involving customer data, KYC records, wallet analytics or other personal data must also take into account the role of the Commission for Personal Data Protection. Bulgaria’s regulatory approach is closely aligned with the EU framework rather than based on a separate national model. This means that international stand- ards influence the Bulgarian market mainly through EU legislation and guidance. FATF standards are reflected through AML/CFT rules, Travel Rule obligations and risk-based supervision. BIS and IOSCO standards are relevant more indirectly, through their influence on EU rules on market infrastructure, prudential treatment, stablecoins, financial instruments and supervisory expectations. In practice, businesses operating in Bulgaria should expect local regulators to apply EU standards and guidance rather than a purely domestic interpretation of blockchain and crypto-asset regula- tion. 2.2 Crypto-Asset Regulatory Frameworks Crypto-assets in Bulgaria are characterised by refer- ence to MiCA. Before applying MiCA, it is also neces- sary to check whether the asset is already regulated under another framework, for example as a financial instrument under MiFID II, electronic money, a deposit or another regulated product. If it is, the existing finan- cial-services regime may apply instead of, or along- side, MiCA. Bulgaria has adopted a specific national Markets in Crypto-Assets Act to support the application of MiCA. The Act gives effect to the local supervisory and pro- cedural aspects of the regime, while MiCA remains the main substantive framework. As a result, crypto- assets and crypto-asset services in Bulgaria are regu- lated through a combination of MiCA, the Bulgarian implementing law and other existing regimes such as AML/CFT, payment services, electronic money, data protection, tax, consumer protection and operational resilience rules.
Bulgaria does not prohibit crypto-assets or block- chain-based products as such. Any operational restrictions are tied to the activity that’s performed. A business may not provide regulated crypto-asset services without the required authorisation; issue or offer regulated tokens without meeting the applicable disclosure and approval requirements; or engage in market abuse, misleading marketing, AML breaches or other prohibited conduct. Retail-facing activity is not prohibited, but it attracts stronger investor-pro- tection expectations, particularly around disclosure, risk warnings, suitability, complaints and safeguarding of client assets. Over the next 12 months the most important develop- ment will be market adjustment. The legal framework is now largely in place, but businesses still need to translate it into workable governance, compliance, custody, disclosure and client-protection arrange- ments. Smaller providers may find it difficult to absorb the cost of licensing, governance, custody and opera- tional resilience requirements, while better-prepared firms may benefit from greater trust and reduced com- petition from unregulated operators. Public registers of authorised CASPs and non-compliant entities are also likely to make regulatory status more visible to clients, banks and commercial partners. As a result, the market is expected to become smaller, more for- mal and more institutionally focused, but also more credible for businesses seeking to use Bulgaria as an EU entry point. 2.3 Regulated Firms and Legal Wrappers If the investment is performed through a fund rather than buying crypto-assets directly, the analysis chang- es, but it does not become unregulated. The investor is no longer simply buying crypto-assets. They are buying units or shares in a fund, so fund regulation becomes relevant. In Bulgaria, this means that the structure may need to be reviewed under the rules for investment funds, alternative investment funds, fund managers, market- ing of fund interests and investor disclosures. If the fund is offered only to professional or well-informed investors, the structure may be easier to manage. If it is offered to retail investors, the regulatory and dis- closure requirements will usually be more demanding.
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