Crypto Overview in Bulgaria

Regulatory data is for informational purposes only and may not reflect the most current legal developments. Always consult qualified professionals before making decisions.

Legal Classification and Regulatory Framework

Cryptocurrency Status

As a European Union member state, Bulgaria is subject to the directly applicable Markets in Crypto-Assets Regulation (MiCA, Regulation (EU) 2023/1114). MiCA classifies crypto-assets into three categories: asset-referenced tokens (ARTs), electronic money tokens (EMTs), and other crypto-assets. Cryptocurrencies such as Bitcoin and Ethereum fall within the third category and are treated as digital representations of value rather than legal tender.

Bulgarian courts have recognised cryptocurrencies as property, affording legal protections in fraud, theft, and insolvency proceedings. Assets that exhibit revenue-sharing or derivative characteristics may additionally fall within the scope of the Securities and Investment Business Act, requiring analysis on a case-by-case basis.

Tax Treatment

Bulgaria offers one of the most competitive personal tax rates for crypto gains in the EU. Under the Personal Income Taxes Act (PITA), profits from selling or exchanging cryptocurrency are treated as income from the disposal of financial assets and taxed at a flat 10% rate on net gains (selling price minus acquisition cost). The National Revenue Agency (NRA / Национална агенция за приходите) applies general financial-asset tax rules, as no dedicated crypto tax legislation exists.

Key rules under NRA doctrine: holding without disposal is not a taxable event; exchanging one cryptocurrency for another is a taxable disposal; staking rewards and airdrops carry a zero acquisition cost, so the full sale proceeds are taxable at 10% upon disposal. Mining income is treated as professional activity income and taxed at 15%. Losses may offset gains within the same fiscal year only, with no carryforward. Bulgarian law also applies an automatic 10% deduction for legally recognised expenses without requiring proof of actual expenditure. Gains must be declared in Schedule No. 5 of the annual tax return, due by 30 April of the following year.

For corporations, crypto gains are subject to the standard 10% corporate income tax. Cryptocurrency transactions are generally exempt from value added tax (VAT), in line with the European Court of Justice ruling on currency-like assets. Certain ancillary services such as mining operations may be subject to VAT depending on their specific features.

Regulatory Oversight

Bulgaria operates a dual supervisory structure under MiCA. The Financial Supervision Commission (FSC / Комисия за финансов надзор) is the competent authority for most CASPs, including custody providers, exchanges, trading platforms, and portfolio managers. The Bulgarian National Bank (BNB / Българска народна банка) supervises issuers of electronic money tokens under payment services law.

All CASPs must comply with AML and counter-terrorist financing requirements under the Measures Against Money Laundering Act (MAMLA). This includes implementing Know Your Customer (KYC) procedures, transaction monitoring, suspicious activity reporting, and record retention. The Financial Intelligence Directorate provides AML/CFT oversight alongside the FSC. CASPs are also subject to Regulation (EU) 2022/2554 on Digital Operational Resilience (DORA), requiring robust cybersecurity and business continuity frameworks.

Business Environment

Banking Relationships

Banking access for crypto businesses in Bulgaria is affected by two overlapping factors. First, Bulgaria has been on the FATF grey list since October 2023 following deficiencies identified in the MONEYVAL 2022 Mutual Evaluation Report, principally concerning money laundering investigations and parallel financial investigations. This status requires international counterparties to apply enhanced due diligence to Bulgarian-linked transactions and creates friction in correspondent banking relationships. Second, Bulgarian commercial banks retain broad discretion over their risk appetite and may impose additional due diligence requirements on crypto firms regardless of licensing status.

Licensed CASPs operating under the BG MiCA Act are better positioned to establish banking relationships than unregistered operators, given the compliance evidence their authorisation provides. The Bulgarian government created an AML task force in 2025 aimed at addressing the FATF deficiencies, with a potential exit from the grey list targeted for 2026.

Innovation Support

The FSC operates an Innovation Hub to facilitate dialogue between fintech companies and the regulator, providing guidance on innovative technologies in the non-banking financial sector without requiring a formal application. Bulgaria does not operate a dedicated national regulatory sandbox, but the FSC actively promotes participation in the European Blockchain Sandbox for companies wishing to test distributed ledger technology, artificial intelligence, and Internet of Things applications.

The Bulgarian Fintech Association unites over 150 member companies and stakeholders and partners with academic institutions, including Sofia University, to deliver fintech and blockchain programmes. The Bulgarian Stock Exchange has listed exchange-traded notes (ETNs) tracking Bitcoin and Ethereum, providing retail and institutional investors with regulated crypto exposure through traditional market infrastructure.

Crypto License in Bulgaria

The BG MiCA Act, in force from 8 July 2025, establishes the national framework for CASP authorisation, superseding the prior NRA registration-based regime. The Financial Supervision Commission (FSC) is the competent authority for most service types; EMT issuers fall under the BNB. An FSC CASP licence carries passporting rights across all 27 EU member states under MiCA Article 62, removing the need for additional national authorisations elsewhere in the EU.

Licensing Requirements

MiCA sets tiered minimum paid-in capital requirements based on the services offered. Class 1 services, which cover custody and administration and transfer services, require a minimum of EUR 50,000. Class 2 services, covering exchanges for fiat or other crypto-assets and order execution, require EUR 125,000. Class 3 services, including operating a trading platform, portfolio management, and crypto-asset advice, require EUR 150,000. Alternatively, a CASP may meet requirements by holding capital equal to one quarter of its fixed overheads from the preceding year, whichever figure is higher, reviewed annually. Capital must be in Common Equity Tier 1 form and deposited with an EEA credit institution before the application is submitted.

Every applicant must satisfy fit-and-proper and integrity standards for all members of the governing body and key-function holders. The FSC applies strict organisational tests requiring a clear governance structure covering compliance, risk, and internal audit functions, detailed outsourcing policies, AML/KYC procedures, designation of an AML compliance officer, business continuity and disaster recovery plans, and a cybersecurity framework meeting DORA standards. The FSC also sets fee schedules under Ordinance No. 76 of 12 June 2025, with Class 1 fees among the lowest in the EU for a CASP authorisation.

Authorized Activities

MiCA Article 3(1)(16) defines ten categories of crypto-asset services, and an FSC CASP licence can cover any combination: custody and administration; operation of a trading platform; exchange for fiat or other crypto-assets; execution of client orders; placing of crypto-assets; reception and transmission of orders; crypto-asset advice; portfolio management; and transfer services. ART and EMT issuers are subject to separate authorisation requirements under MiCA Titles III and IV respectively.

Application Process and Timeline

Under MiCA Article 63(9), the FSC must issue a fully reasoned authorisation decision within 40 working days of receiving a complete application, with written notification within five working days of that decision. The BG MiCA Act does not permit silent denial. Internal preparation typically takes two to four months; FSC processing adds a further two to four months, giving a realistic total of four to nine months.

The FSC encourages pre-application engagement, including in-person meetings, and has sent questionnaires to formerly registered VASPs to assess MiCA readiness. The first CASP licence under the BG MiCA Act was issued to Alaric Securities Ltd, confirming the process is operational.

Entities registered in the NRA’s AML register before 30 December 2024 benefit from a grandfathering period running until 1 July 2026, during which they may continue operating without a full FSC licence. Entities that registered between 30 December 2024 and 8 July 2025 must apply by 8 October 2025. Operating without a licence after 1 July 2026 carries sanctions of up to EUR 2,556,000 or 6.25% of global annual turnover.

Market Characteristics

Adoption Patterns

Bulgaria has an active cryptocurrency community, with Sofia, Plovdiv, and Varna serving as the main hubs for blockchain and digital asset activity. Consumer adoption has been supported by high internet penetration, a digitally literate population, and established mobile banking infrastructure. Institutional interest has grown alongside the availability of regulated investment products, including the Bitcoin and Ethereum ETNs listed on the Bulgarian Stock Exchange.

Industry Focus

Bulgaria’s crypto sector has established particular strengths in exchange operations, custody, and payment services, driven by the country’s competitive tax environment, skilled IT workforce, and EU membership. Sofia has attracted both domestic startups and international companies seeking an EU-licensed base for Central and Eastern European operations. Operating costs remain lower than in Western European financial centres, which supports competitiveness for firms seeking MiCA passporting access to the full EU market.

One of the most prominent firms with Bulgarian roots is Nexo, a crypto lending and asset management platform founded in 2018 by Bulgarian entrepreneurs Kosta Kunchev and Antoni Trenchev, which manages over 4 million users across more than 200 jurisdictions. Nexo is registered in Zug, Switzerland, and maintains a significant operational presence in Bulgaria through its local subsidiary.

Regulatory Evolution

Bulgaria’s regulatory trajectory has moved from a minimal AML-focused registration regime under the NRA, which listed 305 VASPs as of mid-2024, to a comprehensive MiCA-aligned authorisation framework under the FSC. The BG MiCA Act marks the country’s first dedicated crypto-asset legislation and positions Bulgaria as one of the early EU member states to complete full MiCA transposition.

The country also participates in the Crypto-Asset Reporting Framework (CARF), which will introduce mandatory tax transparency reporting by CASPs. Bulgaria’s planned transition to the euro in the coming years may affect how CASP businesses structure fiat currency conversion operations. The ongoing FATF grey list status remains the most significant near-term compliance risk for firms operating in or banking through Bulgaria, though the government’s active reform programme targets removal from the grey list.