BULGARIA Law and Practice Contributed by: George Chisuse, Ivelin Vassilev, Stephany Valcheva and Daniel Kolev, VC Law
cially moves the price of a crypto-asset on a venue or liquidity pool in order to influence an oracle and trig- ger a favourable liquidation, settlement or payout, this may raise market manipulation concerns. This type of behaviour is less familiar from traditional securities markets, but it is highly relevant in blockchain-based trading and lending structures. 2.6 Non-Compliance The enforcement picture is still developing as the MiCA regime is new, and the FSC’s current approach appears to be focused mainly on implementation, guidance and helping the market understand the new requirements. This does not mean that breaches will be treated lightly. The Bulgarian Markets in Crypto- Assets Act gives the FSC substantial enforcement powers, including fines, coercive measures, orders to cease unauthorised activity, publication of sanctions, withdrawal of authorisation, website or platform- blocking measures and, in urgent cases, requests for court-ordered freezing or sequestration of assets. The financial consequences can be significant. For CASP-related breaches, legal persons may face turnover-linked sanctions, and repeated violations can lead to higher penalties. Market abuse is treated particularly seriously, with sanctions for entities that may reach the higher of EUR7.7 million or 7.5% of annual turnover, and higher levels for repeated vio- lations. In addition, breaches of the Travel Rule and DORA-related requirements are covered by separate sanction provisions. Sanctions may also apply to individuals involved in the breach, not only to the legal entity. Members of the management body, directors, officers or other responsible persons may face personal administrative fines where the breach is attributable to their conduct, failure to act or failure to ensure compliance. This is particularly relevant for CASPs, where governance, fit-and-proper standards and senior management responsibility are central parts of the MiCA compli- ance framework. Cross-border breaches are likely to be handled through the MiCA supervisory co-operation framework. Where a firm authorised in another member state provides services in Bulgaria, the FSC may co-ordinate with the
home-state authority. Where a firm operates without authorisation or targets Bulgarian clients unlawfully, the FSC can require the activity to stop and may take measures against the relevant online interface, appli- cation, domain or platform presence. During the following 12 months, the attitude of the regulator is likely to become more enforcement- oriented as the market moves from transition to full compliance. Over the early implementation period businesses may still benefit from regulatory guidance and opportunities to correct gaps. However, firms that ignore licensing requirements, provide services without authorisation, mislead clients, fail to safeguard assets or disregard AML, Travel Rule, DORA or mar- ket abuse obligations should expect a much stricter response. The practical message is that Bulgaria is open to serious crypto businesses, but not to informal or non-compliant operations. 3. Licensing and Set-Up Requirements 3.1 Licensing Requirements The need for a licence is triggered by the provision of regulated crypto-asset services rather than by the use of blockchain technology itself. The practical test is what the business actually does for clients. A pure software provider may fall outside the perimeter, but a platform that holds client keys, matches trades, executes transactions or facilitates exchange activity may require authorisation even if it presents itself as a technology business. The territorial analysis is also substance-based. A Bulgarian entity providing crypto-asset services will need to obtain authorisation in Bulgaria and an EU- authorised CASP may serve Bulgarian clients through passporting. However, a non-EU provider cannot actively target Bulgarian or EU clients without con- sidering MiCA authorisation. Reverse solicitation is available only in narrow circumstances where the cli- ent approaches the provider entirely on their own ini- tiative, and European Securities and Markets Authority (ESMA) has made clear that it should not be used to circumvent the licensing regime.
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