Preface: In the dynamic realm of financial transactions, the surge of cryptocurrency businesses, including notable players like Bitcoin and Ethereum, has reshaped the global market. Bulgaria, with its progressive approach to technology and business, has emerged as an enticing hub for aspiring cryptocurrency entrepreneurs. The Bulgarian government recognizes the transformative potential of digital currencies and has strategically implemented licensing frameworks to regulate and support these enterprises, ensuring transparency, security, and legal compliance.
ADVANTAGES OF OBTAINING A BULGARIA CRYPTO LICENSE
Gain a Competitive Edge with a Crypto License in Bulgaria:
1. Progressive Regulatory Environment: Bulgaria offers a forward-looking regulatory landscape for the cryptocurrency industry. Securing a crypto license ensures compliance with the country’s specific regulations, providing stability and legal certainty for cryptocurrency ventures.
2. EU Passporting Rights: As an EU member state, Bulgaria grants passporting rights to businesses holding a crypto license. This enables them to extend their services across the European Economic Area (EEA), tapping into a vast market with harmonized regulations.
3. Supportive Government Initiatives: The Bulgarian government actively supports technology-driven sectors, including cryptocurrency. Initiatives such as innovation hubs, financial incentives, and collaborations create a conducive ecosystem for crypto businesses to thrive.
4. Competitive Operating Costs: Bulgaria offers a cost-effective business environment with lower operating expenses compared to many EU countries. This includes competitive labor costs, office rentals, and overall business expenses, allowing crypto businesses to optimize operations efficiently.
5. Favorable Taxation Policies: Bulgaria’s advantageous tax policies benefit crypto businesses. With one of the lowest corporate tax rates in the EU, coupled with potential VAT exemptions for certain cryptocurrency activities, the country provides a competitive tax environment.
6. Skilled Workforce: Bulgaria boasts a highly skilled workforce, particularly in technology, software development, and finance. Access to qualified professionals familiar with blockchain technology and cryptocurrencies is a valuable asset for crypto businesses looking to build and expand their teams.
7. Enhanced Investor Confidence: Acquiring a crypto license in Bulgaria boosts investor confidence. Regulatory oversight and compliance showcase secure and transparent operations, making it attractive to local and international investors seeking compliant and trustworthy cryptocurrency ventures.
LAWS GOVERNING A CRYPTO LICENSE IN BULGARIA
Navigating the Regulatory Landscape for Crypto Licenses in Bulgaria:
Explore the Legal Framework:
1. Bulgarian Law on Measures against Money Laundering (AML Law):
Mandates crypto businesses to obtain a license.
Requires robust Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures.
2. Bulgarian Law on Payment Services and Electronic Money:
Regulates payment services, including those involving cryptocurrencies.
Establishes the framework for crypto payment services.
4. Bulgarian Law on Currency Control:
Governs the regulation and control of currency transactions, including crypto activities.
Outlines reporting obligations and restrictions on foreign currency transactions.
5. European Union Regulations:
Bulgaria, as an EU member state, adheres to EU regulations affecting the cryptocurrency industry.
Compliance with the EU’s Anti-Money Laundering Directive (AMLD), such as the Fifth Anti-Money Laundering Directive
Understand Compliance Requirements:
- 1. Virtual Currencies Defined:
Digital representations of value not issued or guaranteed by a central authority.
Accepted as a medium of exchange and electronically transferable, storable, and tradable.
2. Crypto Wallet Providers Defined:
Entities offering custodial services for protecting private cryptographic keys.
3. 5AMLD Compliance Obligations:
Implementation of customer due diligence and KYC procedures.
Record-keeping of transaction information, customer identification, and associated activities.
Risk assessments for money laundering and terrorist financing.
Mandatory reporting of transactions exceeding BGN 30,000 (approx. €15,000) to the Financial Intelligence Directorate.
4. Suspicious Activity Reporting:
Crypto businesses obliged to report suspicious customers, transactions, and activities.
Reporting to the Financial Intelligence Directorate following internal procedures.
Stay Compliant, Thrive Securely:
ACTIVITIES ALLOWED UNDER A BULGARIA CRYPTO LICENSE
Discover the Range of Permitted Cryptocurrency Operations:
1. Cryptocurrency Exchange:
A crypto license empowers businesses to run cryptocurrency exchange platforms.
Facilitate the seamless buying, selling, and trading of digital currencies against fiat or other cryptocurrencies.
2. Custody of Crypto-Assets:
Companies holding a crypto license can offer secure storage and custody services.
Safeguard clients’ crypto-assets, including private keys, wallets, and digital holdings.
3. Wallet Services:
Crypto license holders can provide comprehensive crypto-wallet services.
Offer secure storage, transaction facilitation, and overall management of digital assets for users.
4. Payment Services with Cryptocurrencies:
Businesses with a crypto license can dive into the realm of payment services using cryptocurrencies.
Accept digital currencies for goods and services, facilitate crypto-to-fiat conversions, and enable crypto-based remittances.
5. Crypto-Asset Advisory Services:
Certain crypto licenses may authorize businesses to offer advisory services.
Provide insights into market analysis, investment guidance, and regulatory compliance within the cryptocurrency domain.
Key Functions of the FSC in the Crypto License Landscape:
- 1. Guidelines and Requirements:
The FSC establishes comprehensive guidelines and requirements for the acquisition of crypto licenses.
Ensures that applicants adhere to applicable laws and regulations governing the cryptocurrency sector.
2. Assessment of Eligibility:
In the application process, the FSC assesses the eligibility of entities seeking crypto licenses.
Reviews business plans, evaluates compliance measures, and considers financial stability to gauge suitability in the crypto industry.
3. Ongoing Oversight and Supervision:
Post-licensing, the FSC maintains a vigilant stance by continuously overseeing and supervising licensed entities.
Conducts regular inspections, monitors compliance with regulatory requirements, and addresses any instances of non-compliance or misconduct.
4. Preserving Industry Integrity:
The FSC plays a central role in upholding the integrity, stability, and transparency of the cryptocurrency industry in Bulgaria.
Acts as a regulatory safeguard, safeguarding the interests of investors, consumers, and the overall financial system.
5. Collaboration for Compliance:
Close collaboration with the FSC is imperative for businesses seeking a crypto license in Bulgaria.
Adhering to the regulations and guidelines set forth by the FSC is not only essential for securing a license but also for maintaining compliance throughout the operational lifecycle.
REQUIREMENTS FOR OBTAINING A CRYPTO LICENSE IN BULGARIA
Embarking on the journey to obtain a crypto license in Bulgaria necessitates a strategic corporate structure, aligning with the standard legal framework for company establishment. Here are key elements to consider:
A minimum of one shareholder, whether an individual or a legal entity, is required.
Shareholders own the company, holding shares that represent their ownership stakes.
Designate at least one local director responsible for day-to-day management and operational oversight.
The director plays a pivotal role in steering the business towards compliance and success.
3. Share Capital:
Adhere to the minimum share capital requirements stipulated by the Bulgarian Commercial Act.
Share capital serves as the financial backbone of the company, providing a measure of financial security. Notably, the minimum capital for a Bulgarian Limited Liability Company applying for a crypto license is BGN 2 (€1).
4. Registered Office:
Establish a registered office address within Bulgaria.
This official address serves as the hub for receiving and managing the company’s documents and correspondence. Virtual offices are permissible, providing flexibility.
5. Company Secretary:
Appoint a company secretary as a mandatory requirement for entities seeking a crypto license in Bulgaria.
The company secretary maintains correspondence and serves as a representative of the entity in the country.
PROCESS OF OBTAINING A CRYPTO LICENSE IN BULGARIA
Embarking on the journey to obtain a crypto license in Bulgaria involves a strategic and well-orchestrated process. Fionza Consultants, with its team of seasoned experts, offers comprehensive guidance through the following crucial steps:
Step 1: Planning and Strategizing for Company Formation
Collect KYC documents of prospective shareholders, directors, and beneficial owners.
Obtain a signed power of attorney to act on behalf of the client.
Reserve three alternative company names with the Bulgarian Trade Register.
Step 2: Registration of a New Bulgarian Company
Analyze long-term business needs and guide on the most suitable business structure, often recommending a Limited Liability Company (OOD).
Assist with the registration process, including the preparation of incorporation documents, notarization, and translation.
Complete the company registration within an expected timeframe of 2 weeks.
Step 3: Pre-application Preparation and Document Drafting
Prepare necessary policies and authorization documents, including AML/CFT and insurance policies.
Assist in drafting a comprehensive business plan and compliance program aligned with Bulgarian and EU directives.
Implement written compliance policies and provide ongoing assistance in program enhancement.
Step 4: Meeting Substance Requirements
Assist in fulfilling economic substance requirements, including a local registered address and a local director in Bulgaria.
Provide nominee director services and assist in recruiting local qualified employees.
Undertake candidate shortlisting and preliminary interviews for key employees, including the compliance officer.
Step 5: Corporate Bank Account Opening
Assist in consolidating required corporate documents for opening a corporate bank account with a Bulgarian bank.
Facilitate the process without the necessity for directors and shareholders to travel to Bulgaria.
Ensure the courier of internet banking token and access codes upon successful account opening.
Step 6: Filing for Authorization and Registration
Online submission of all prepared documents for authorization of the cryptocurrency company.
Navigate negotiations with regulatory bodies and address inquiries or requests for additional information.
Step 7: Accounting and Tax Obligations
Ensure ongoing compliance with regulatory laws set by the Bulgaria National Revenue Agency.
Provide monthly bookkeeping, preparation of financial statements, and annual tax return filings.
Fionza Consultants is your dedicated partner in every step of the crypto license application journey, offering expert guidance and support to ensure a seamless and compliant establishment of your cryptocurrency venture in Bulgaria.