Overview of Bulgarian Cryptocurrency Licensing
Bulgaria offers cryptocurrency licensing under a comprehensive regulatory framework that provides EU market access through passporting rights. The Financial Supervision Commission (FSC) oversees licensing applications, applying standards aligned with EU Anti-Money Laundering Directives while maintaining competitive operating costs and favorable tax treatment.
Bulgaria's progressive regulatory environment, combined with one of the lowest corporate tax rates in the EU, attracts cryptocurrency businesses seeking European market presence with cost-effective operations.
Regulatory Framework
Bulgarian cryptocurrency regulation operates under multiple legislative frameworks:
Bulgarian Law on Measures against Money Laundering (AML): The primary legislation governing cryptocurrency business registration and AML/CFT compliance.
Law on Payment Services and Electronic Money: Framework for payment-related cryptocurrency activities.
Law on Currency Control: Governs foreign exchange aspects of cryptocurrency operations.
EU Anti-Money Laundering Directives (AMLD/5AMLD): European requirements implemented in Bulgarian law.
Financial Supervision Commission (FSC): The regulatory authority overseeing licensing applications, setting guidelines, conducting inspections, and ensuring compliance monitoring.
Key Advantages
Regulatory Benefits
- •Progressive regulatory environment with clarity and legal certainty
- •EU passporting rights enabling operations across the European Economic Area
- •Government support through innovation initiatives and incentives
- •Enhanced investor confidence through regulatory compliance
Cost Advantages
- •Lower operating costs compared to other EU nations
- •10% corporate income tax (among lowest in EU)
- •Competitive labor costs
- •Tax exemptions for certain cryptocurrency-related activities
Market Position
- •Skilled workforce in technology and blockchain sectors
- •Growing FinTech ecosystem
- •Gateway to EU markets
- •Established professional services infrastructure
Permitted Activities
Licensed Bulgarian cryptocurrency entities may engage in:
Exchange Operations
- •Cryptocurrency exchange operations (crypto-to-crypto)
- •Cryptocurrency-to-fiat exchanges
- •Trading platform operation
Custody and Wallet Services
- •Custodial services for crypto-assets
- •Wallet service provision
- •Secure asset storage
Payment and Advisory
- •Cryptocurrency payment processing
- •Crypto-asset advisory services
- •Investment guidance for digital assets
Corporate Requirements
Minimum Structure
- •One shareholder (individual or legal entity)
- •One local director (nominee services available)
- •Registered office in Bulgaria
- •Appointed company secretary
Capital Requirements
- •Minimum capital: BGN 2 (approximately €1) for company formation
- •Additional capital may be required based on activity scope
- •Proof of adequate operational funds
Preferred Entity Type
Limited Liability Company (OOD) recommended for regulatory simplicity and standard cryptocurrency operations.
Documentation Requirements
Application Documentation
- •Completed FSC application form
- •Detailed business plan with market analysis
- •Company incorporation documents
- •Unique Identification Code (UIC)
Personal Documentation
- •Personal identification for all key personnel
- •Proof of residential addresses
- •Criminal background clearances
Compliance Documentation
- •AML/KYC policies and procedures
- •Financial statements and projections
- •Payment account information
- •Website/mobile application details
- •Service jurisdiction list
Authorization Process
Step 1: Planning and Documentation
- •Collect KYC documents from shareholders, directors, and beneficial owners
- •Execute power of attorney
- •Reserve three company name alternatives
Step 2: Company Registration
Timeline: Approximately 2 weeks
- •Structural analysis and business consultation
- •Incorporate LLC with Commercial Register
- •Prepare memorandum and articles of association
- •Obtain Certificate of Incorporation
Step 3: Document Preparation
- •Draft AML/CFT policies and insurance documentation
- •Develop comprehensive business plan
- •Create compliance program aligned with EU directives
Step 4: Substance Requirements
- •Establish local registered address
- •Appoint local director
- •Recruit qualified compliance officers and staff
Step 5: Corporate Banking
- •Open corporate bank account with Bulgarian bank
- •Deposit minimum capital requirements
- •Remote account management supported
Step 6: License Application
- •Submit complete documentation package to FSC
- •Address regulatory inquiries
- •Coordinate with National Revenue Agency (NRA)
Step 7: Ongoing Compliance
- •Monthly bookkeeping services
- •Financial statement preparation
- •Annual tax return filings
Timeline
Company Formation
- •Company registration: approximately 2 weeks
- •Bank account opening: within 6 weeks total
License Review
- •FSC license review: 2-3 months typical
- •Total process varies by application completeness
Tax Environment
Corporate Income Tax
- •10% standard rate (among lowest in EU)
- •15% rate for assets held under one month
Value Added Tax
- •Generally exempt for cryptocurrency exchanges
- •May apply to mining, wallet operations, or exchange services in certain circumstances
Withholding Tax
- •10% on payments to non-residents
- •Lower rates possible under double taxation treaties
Personal Income Tax
- •10-29% depending on income level
Transfer Pricing
- •Arm's-length requirement for related-party transactions
Compliance Obligations
Ongoing Requirements
- •Regular regulatory reporting to FSC
- •Annual audited financial statements
- •Capital adequacy maintenance
- •AML/CFT compliance monitoring
AML/CFT Requirements
- •Customer due diligence procedures
- •Transaction monitoring
- •Suspicious activity reporting
- •Record keeping (minimum 5 years)
Alternative: Ready-Made Companies
Pre-authorized cryptocurrency companies available for faster market entry:
- •Completed incorporation
- •Regulatory approval obtained
- •Eliminates formation delays
- •Maintains compliance standards
EU Passporting
Bulgarian cryptocurrency licenses provide passporting rights throughout the European Economic Area, enabling:
- •Cross-border service provision
- •Access to 450+ million European consumers
- •Single regulatory approval for EU-wide operations
Practical Considerations
Professional Support
Most applicants engage:
- •Bulgarian legal counsel familiar with FSC requirements
- •Compliance specialists for AML/CFT framework development
- •Local accounting and audit support
- •Corporate services providers
Banking Relationships
Bulgarian banks familiar with cryptocurrency businesses provide corporate banking facilities. Remote account management available.
Language
Bulgarian language requirements may apply for certain regulatory submissions.
Conclusion
Bulgarian cryptocurrency licensing provides EU market access through one of the bloc's most cost-effective regulatory environments. The combination of low corporate tax (10%), minimal capital requirements (BGN 2 for formation), and EU passporting rights attracts international cryptocurrency businesses seeking European presence.
The 2-3 month FSC review timeline and established regulatory framework offer predictable licensing pathways. Success requires robust AML/CFT compliance frameworks, local substance including Bulgarian director, and comprehensive documentation.
Companies considering Bulgarian cryptocurrency licensing should engage appropriate professional support and ensure their business models align with FSC expectations for virtual currency service providers.