Crypto License in Bulgaria

Crypto License in Bulgaria 

• Tetra Consultants assists international clients with the process of obtaining a crypto license in Bulgaria. Our aim is to ensure the smooth setup of your cryptocurrency business in Bulgaria while you can channel your energy onto other important aspects of your business. 

• In the ever-evolving landscape of financial transactions, a profound shift has taken place with the meteoric rise of cryptocurrency businesses. These digital currencies, including the likes of Bitcoin and Ethereum, have captivated the global market with their decentralized nature and immense potential for financial innovation. Within this context, Bulgaria has emerged as a compelling destination for aspiring cryptocurrency entrepreneurs, thanks to its forward-thinking stance on technology and business. Recognizing the need to regulate and facilitate the operations of these enterprises, the Bulgarian government has embarked on a strategic journey, implementing licensing frameworks that ensure transparency, security, and adherence to legal requirements. The licensing process for cryptocurrency businesses in Bulgaria has thus become a pivotal pillar, reflecting the nation’s commitment to embracing digital currencies, protecting stakeholders, and fostering economic prosperity.

• By implementing cryptocurrency license requirements, Bulgaria aims to enhance consumer protection, prevent money laundering, and mitigate potential risks associated with the cryptocurrency industry. Furthermore, the licensing process enables the government to monitor and ensure compliance with anti-money laundering and counter-terrorism financing measures, thereby bolstering the country’s financial integrity and reputation on the global stage. As a result, Bulgaria stands poised to harness the benefits of cryptocurrency businesses while cultivating an environment of trust, stability, and sustainable growth in the digital economy.

Advantages of obtaining a Bulgaria Crypto License 

An entity applying for a crypto license in Bulgaria can take advantage of the following: 

• Progressive Regulatory Environment: Bulgaria has established a progressive regulatory environment for the cryptocurrency industry. By obtaining a crypto license, businesses can operate with confidence, knowing they have met the country’s specific requirements and regulations. This regulatory clarity provides stability and legal certainty for cryptocurrency ventures in Bulgaria.

• EU Passporting Rights: As an EU member state, Bulgaria offers passporting rights, allowing businesses with a crypto license obtained in Bulgaria to provide their services across the European Economic Area (EEA). This enables companies to expand their reach and tap into the vast European market, benefiting from the harmonized regulations within the EU.

• Supportive Government Initiatives: The Bulgarian government has shown a proactive approach in supporting technology-based industries, including the cryptocurrency sector. Through various initiatives, such as the establishment of innovation hubs, financial incentives, and collaboration with industry stakeholders, Bulgaria strives to create a supportive ecosystem for crypto businesses to thrive.

• Competitive Operating Costs: Bulgaria offers a cost-effective business environment, with lower operating costs compared to many other EU countries. This includes competitive labor costs, office rentals, and general business expenses. The favorable cost structure allows crypto businesses to optimize their operations and allocate resources efficiently.

• Favorable Taxation Policies: Bulgaria’s tax policies are advantageous for crypto businesses. The country has one of the lowest corporate tax rates in the EU, offering a competitive tax environment. Additionally, certain activities related to cryptocurrencies may be exempt from value-added tax (VAT), providing additional tax benefits for crypto businesses.

• Skilled Workforce: Bulgaria boasts a highly skilled workforce, particularly in the fields of technology, software development, and finance. The availability of qualified professionals familiar with blockchain technology and cryptocurrencies can be a valuable asset for crypto businesses looking to build and expand their teams.

• Enhanced Investor Confidence: Acquiring a crypto license in Bulgaria enhances investor confidence. The regulatory oversight and compliance demonstrate that the business operates within a secure and transparent framework. This can attract local and international investors who seek compliant and trustworthy cryptocurrency ventures.

Laws governing a crypto license in Bulgaria

The laws governing a crypto license in Bulgaria primarily revolve around financial and regulatory frameworks that aim to ensure the legality, security, and integrity of cryptocurrency operations. Here are some key laws and regulations governing crypto licenses in Bulgaria:

• The Bulgarian Law on Measures against Money Laundering (AML Law): The AML Law sets out the requirements for preventing money laundering and terrorist financing activities. It mandates that cryptocurrency businesses obtain a crypto license and implement robust AML and Know Your Customer (KYC) procedures to mitigate the risks associated with financial crimes.

• The Bulgarian Law on Payment Services and Electronic Money: This law regulates payment services, including those involving cryptocurrencies. It establishes the framework for payment service providers and defines the scope of permissible activities, such as crypto payment services.

• The Bulgarian Law on Currency Control: The Law on Currency Control governs the regulation and control of currency transactions, including those involving cryptocurrencies. It outlines the reporting obligations and restrictions related to foreign currency transactions, which may apply to certain crypto activities.

• European Union Regulations: As an EU member state, Bulgaria is subject to various EU regulations that impact the cryptocurrency industry. These include the EU’s Anti-Money Laundering Directive (AMLD), which sets out common AML requirements across member states. 

• In accordance with the Fifth Anti-Money Laundering Directive (5AMLD), the Bulgarian legislation introduced the concept of “virtual currencies” and defines them as digital representations of value that are not issued or guaranteed by a central bank or public body. These virtual currencies are not necessarily linked to legal tender and do not possess legal status as currency. However, they are accepted by individuals or entities as a medium of exchange and can be electronically transferred, stored, and traded. A crypto wallet provider that offers custodial services is defined as a natural person, legal entity, or other legal entity that provides services to protect private cryptographic keys on behalf of customers for the ownership, storage, and transfer of virtual currencies. In compliance with 5AMLD, crypto businesses are obligated to undertake the following activities:

• Implement customer due diligence and know-your-customer procedures, which can be performed at simplified, advanced, or complex levels. Complex due diligence is mandatory for transactions exceeding BGN 30,000 (approx. €15,000), regardless of whether the transaction is conducted in a single operation or multiple transactions.

• Maintain records of transactions by collecting and retaining relevant information and documentation related to customer identification, transactions, and associated activities.

• Conduct risk assessments for money laundering, terrorist financing, and other illicit financial activities by implementing standardized internal procedures.

• Notify the Financial Intelligence Directorate of the State Agency for National Security in cases where payments exceed BGN 30,000 (approx. €15,000).

• Report information about suspicious customers, transactions, and other activities to the Financial Intelligence Directorate of the State Agency for National Security in accordance with internal procedures.

Activities allowed under a Bulgaria crypto license 

Under a crypto license in Bulgaria, various cryptocurrency-related activities are allowed. These activities may vary depending on the specific type of license obtained. Here are some common activities permitted under a crypto license in Bulgaria:

• Exchange of cryptocurrencies: A crypto license enables businesses to operate cryptocurrency exchange platforms, allowing users to buy, sell, and trade digital currencies against fiat currencies or other cryptocurrencies.

• Custody of crypto-assets: With a crypto license, companies can provide secure storage and custody services for clients’ crypto-assets. This involves safeguarding private keys, wallets, and digital assets on behalf of customers.

• Wallet services: Businesses holding a crypto license can offer crypto-wallet services, allowing users to store and manage their digital assets securely. This includes providing wallet software, facilitating transactions, and ensuring the integrity and security of the stored cryptocurrencies.

• Payment services using cryptocurrencies: A crypto license allows companies to offer payment services involving cryptocurrencies. This includes accepting cryptocurrencies as a form of payment for goods and services, facilitating crypto-to-fiat currency conversions, and enabling crypto-based remittances.

• Crypto-asset advisory services: Some crypto licenses may permit businesses to provide consulting and advisory services related to cryptocurrencies, including market analysis, investment guidance, and regulatory compliance. 

Bulgaria FSC – Regulatory body 

• The regulatory and oversight authority responsible for the application and supervision of crypto licenses in Bulgaria is the Financial Supervision Commission (FSC). The FSC is an independent government agency tasked with regulating and supervising financial activities within the country. It operates under the Bulgarian Law on Financial Supervision.

• The FSC plays a crucial role in the application process for crypto licenses in Bulgaria. It sets the guidelines and requirements for obtaining a crypto license, ensuring compliance with applicable laws and regulations. The FSC assesses the eligibility of applicants, reviews their business plans, and evaluates their compliance measures, financial stability, and suitability to operate in the cryptocurrency sector.

• Once a crypto license is granted, the FSC continues to oversee and supervise the licensed entities. It conducts regular inspections, monitors compliance with ongoing regulatory requirements, and takes appropriate actions to address any non-compliance or misconduct.

• The FSC’s role is essential in maintaining the integrity, stability, and transparency of the cryptocurrency industry in Bulgaria. It acts as a regulatory safeguard, protecting the interests of investors, consumers, and the overall financial system. Working closely with the FSC and adhering to its regulations and guidelines is crucial for businesses seeking a crypto license in Bulgaria.

Requirements for obtaining a crypto license in Bulgaria 

The corporate structure required for obtaining a crypto license in Bulgaria generally follows the standard legal framework for establishing a company in the country. The most common corporate structure for crypto businesses is a limited liability company (LLC) or a joint-stock company (JSC). Here are the key elements of the corporate structure:

• Shareholders: The company must have at least one shareholder, who can be an individual or a legal entity. Shareholders are the owners of the company and hold shares representing their ownership interests.

• Directors/Management: The company should have one local director who is responsible for the day-to-day management and operations of the business.

• Share Capital: The company must have a minimum share capital as required by the Bulgarian Commercial Act of the relevant corporate structure. The share capital represents the financial resources of the company and provides a level of financial security. The minimum capital required when setting up a Bulgarian limited liability Company for applying for a crypto license in Bulgaria is BGN 2 (€1). 

• Registered Office: The company must have a registered office address in Bulgaria. This is the official address where the company’s documents and correspondence are received and maintained. Virtual offices are also allowed. 

• Company secretary: An entity applying for a crypto license in Bulgaria is required to appoint a company secretary to maintain the correspondence and be a representative of the entity in the country. 

Process of obtaining a crypto license in Bulgaria

• Tetra Consultants’ team of licensing experts will thoroughly guide you on how to apply for a crypto license in Bulgaria, what these requirements are, and what they entail. In the section below, our team has outlined the most prevalent steps that take place during the course of applying for a crypto license in Bulgaria. 

Step 1: Planning and strategizing for a new company to be formed

• Tetra Consultants assist international clients with the process to register company in Bulgaria. To officially begin with the process our team will ensure the collection of KYC documents of the prospective shareholders, directors and beneficial owners of the company to be incorporated to ensure the reliability of the project. 

• Once confirmed our team will get the power of attorney signed by the client in order to represent the actions to be taken on the client’s behalf. 

• Once the power of attorney is signed, our team will require you to provide the three alternative company names to be reserved with the Bulgarian Trade Register. 

Step 2: Registration of a new Bulgarian company 

• Tetra Consultants’ team of experts will analyze the long-term business needs and goals of the company. Based on the thorough description, our team will guide you on the most suitable type of business structure to be incorporated in Bulgaria. 

• A Limited Liability Company (OOD) is the most preferred form of entity structure in the Czech Republic for the cryptocurrency business. This entity structure gives the advantage of incorporation with minimal regulatory requirements like low capital requirement (BGN 2), a director and shareholder, a registered legal address, and a company secretary. 

• Tetra Consultants will assist with the registration of a limited liability company with the Bulgaria Official Commercial Register by a registered legal address and a company secretary who will represent the entity in Bulgaria. 

• Tetra Consultants’ legal team will assist with the preparation of incorporation documents like Memorandum and Articles of Association and notarization of the same with the public notary. If required our team will also assist with the translation of such documents to the Bulgarian local language by a certified translator. Once the entity is registered, our team will send the Certificate of Incorporation and other authorized documents to the address given by the client. 

• We expect to complete the process of company registration within 2 weeks. 

Step 3: Pre-application preparation with respect to the drafting of documents

• Tetra Consultants will simultaneously proceed to the preparation of necessary policies and other authorization documents including AML/CFT policies, Insurance policies, etc. 

• Our team of consultants will also assist you in preparing a comprehensive business plan as well as planning a compliance program. The business plan and compliance program will be drafted in writing for your further review and in accordance with the Act and associated regulations imposed by the regulatory authorities in Bulgaria and also following the regulations and guidelines for digital money under the EU directives. 

• Tetra Consultants team is further proficient with the implementation of written compliance policies in upkeeping the license. Our team will review the adopted compliance policy and advise you on how you can more effectively update and improve the compliance program. We will also assist you with the drafting of an effectiveness review of the compliance program. 

Step 4: Meeting substance requirements 

• As the local regulator requires you to ensure fulfilling the economic substance requirements like a local registered address and a local director in Bulgaria. Tetra Consultants will assist you to meet them. Our team will assist with providing nominee director services and, if required, recruiting local qualified employees to join the team.

• Tetra Consultants’ HR team will undertake candidate shortlisting and preliminary interviews for key employees, including the compliance officer. Following that, you can narrow down the final list of prospects to choose who is best suited to join the team. Tetra Consultants will assist in the preparation of an employment contract with the agreed terms once the candidate has been selected.

Step 5: Corporate bank account opening 

• A cryptocurrency business in Bulgaria must set up the necessary infrastructure in order to operate properly and offer unhindered services related to the cryptocurrency exchange. This includes a corporate bank account opening with a Bulgarian bank to ensure the deposit of minimum capital required to apply for a crypto license in Bulgaria. 

• Tetra Consultants will assist in consolidating the required corporate documents for corporate bank account opening with a reputable local bank in Bulgaria that provides relevant services as mentioned above.

• Typically, directors and shareholders are not required to travel to Bulgaria to open a corporate bank account. However, if travel is required, we will have a representative accompany you to the bank meeting. Alternatively, our team will negotiate with the banks to conduct a conference call instead or request a waiver. 

• Once the bank account has been successfully opened, Tetra Consultants will courier the Internet banking token and access codes to your preferred address. Further, our team will provide the instruction to maintain the minimum capital required to apply for a crypto license in Bulgaria. 

Step 6: Filing for authorization and registration of the crypto company 

• With all the documents in place, our team will proceed with the online submission of all the documents prepared for authorization of the cryptocurrency company through the online filing of the application introduced by FSC for cryptocurrency license application. Once submitted the relevant trade licensing authority process the same with the regulatory authorities, NRA and FSC. 

• At this stage, our team will ensure through negotiations with the regulatory body and file for the responses to the inquiry posed additional information may be required to be accompanied the application. 

Step 7: Accounting and tax obligations

• Tetra Consultants’ team of Chartered Accountants will ensure that your newly established cryptocurrency company continues to meet regulatory laws set by the Bulgaria National Revenue Agency. This includes providing you with monthly bookkeeping, preparation of financial statements, and annual tax return filings.

Documents required to obtain a crypto license in Bulgaria 

The specific documents required for the application of a crypto license in Bulgaria may vary based on the type of license and the activities of the crypto business. However, generally, the following documents are typically required during the application process:

• Application Form: A completed application form provided by the Financial Supervision Commission (FSC) is usually required. This form collects information about the applicant, the proposed cryptocurrency activities, and the corporate structure.

• Business Plan: A detailed business plan outlining the nature of the cryptocurrency business, its objectives, market analysis, financial projections, risk assessment, and compliance measures is typically required. The business plan should demonstrate a thorough understanding of the industry and the viability of the proposed operations.

• Company Documents: Documents related to the establishment of the company, such as the Articles of Association, Certificate of Incorporation, Memorandum of Association, and shareholder details, may be required. These documents provide information about the legal structure and ownership of the company.

• Identification Documents: Personal identification documents, such as passports or national ID cards, are typically required for the individuals involved in the management and ownership of the crypto business. This includes directors, shareholders, and beneficial owners.

• Proof of Address: Documents that confirm the residential addresses of key individuals associated with the crypto business, such as utility bills or bank statements, may be required.

• Compliance Policies and Procedures: Crypto businesses are required to establish and document robust anti-money laundering (AML) and know-your-customer (KYC) policies and procedures. These policies outline the steps taken to mitigate the risks of money laundering, terrorist financing, and other financial crimes within the crypto business.

• Financial Statements: Depending on the stage of the business, financial statements, such as audited financial reports, bank statements, and financial projections, may be required to demonstrate the financial stability and capability of the crypto business.

• Unique identification code (Unique Identification Code – UIC) in the commercial register.

• Information on the opened payment account: account number, name of the payment service provider where the account is opened (one or several accounts can be indicated).

• Website or mobile application address for virtual currency exchange or digital wallet services.

• Description of the activity the applicant intends to perform.

• List of countries in which the applicant intends to offer its services.

• Information on whether the applicant is a cross-border company or part of a cross-border entity.

Readymade Bulgaria Crypto Authorized Company 

• In contrast to incorporating a new Bulgarian company, we also offer the provision of ready-made Bulgaria crypto authorized companies as an alternative solution. Rather than going through the entire process of company formation, a ready-made company offers a streamlined and time-saving approach. With our ready-made companies, you can acquire an established entity that is already authorized for cryptocurrency activities in Bulgaria. These companies have already completed the initial incorporation and registration process, allowing you to fast-track your entry into the cryptocurrency market. By choosing a ready-made company, you can avoid the complexities and delays associated with starting from scratch.

• Our team conducts thorough due diligence on each ready-made company to ensure its legal compliance and financial stability. We verify that the company has obtained the necessary licenses and authorizations for cryptocurrency-related activities in Bulgaria. This provides you with peace of mind and ensures that you are acquiring a reliable and credible business foundation. We understand the unique requirements of cryptocurrency businesses and ensure that our ready-made companies align with the specific regulations and standards governing the industry. This allows you to commence your operations promptly and confidently, without the need to navigate the entire incorporation process.

• Opting for a ready-made Bulgaria crypto authorized company can save you valuable time and resources. Instead of waiting for the completion of the company formation process, you can acquire a pre-existing entity that is already authorized and ready to engage in cryptocurrency activities. This enables you to focus on growing your business and seizing opportunities in the rapidly evolving cryptocurrency market. Additionally, our team provides ongoing support and maintenance services, ensuring that your acquired company remains compliant with legal and regulatory requirements. By choosing a ready-made company, you can expedite your entry into the Bulgarian cryptocurrency sector and gain a competitive edge in the industry.

Tax implication of obtaining a crypto license in Bulgaria

The tax implications for a cryptocurrency company in Bulgaria can vary depending on the specific activities and transactions carried out by the company. Here are some key points to consider:

• Corporate Income Tax (CIT): Cryptocurrency-related activities may be subject to corporate income tax in Bulgaria. The standard corporate income tax rate is 10%. However, profits derived from the sale of financial assets held for a period of less than one month may be subject to a higher tax rate of 15%.

• Value Added Tax (VAT): In Bulgaria, cryptocurrency transactions are generally treated as services or intangible goods for VAT purposes. The sale or exchange of cryptocurrencies is generally exempt from VAT. However, if the company provides services related to cryptocurrency mining, wallet operations, or exchanges, VAT may be applicable.

• Withholding Tax: If the company makes payments to non-resident individuals or entities, such as for royalties, dividends, or interest, withholding tax may apply. The standard withholding tax rate in Bulgaria is 10%. However, lower rates or exemptions may apply if a tax treaty exists between Bulgaria and the recipient’s country of residence.

• Personal Income Tax (PIT): Employees or individuals receiving income in the form of cryptocurrency may be subject to personal income tax. The personal income tax rates in Bulgaria range from 10% to 29%, depending on the individual’s income level.

• Transfer Pricing: If the cryptocurrency company engages in related-party transactions, such as buying or selling cryptocurrencies to related entities, transfer pricing rules may apply. These rules require transactions between related parties to be conducted at arm’s length and may necessitate documentation to support the transfer pricing methodology used.

• It is important to note that the tax regulations surrounding cryptocurrency are evolving, and additional guidance or amendments to existing laws may be issued in the future. To ensure compliance with Bulgarian tax laws, it is advisable to consult our team of qualified tax professionals who can provide specific advice tailored to your company’s circumstances and activities.

How much time does it take to obtain a crypto license in Bulgaria?

• Tetra Consultants’ team of consultants ensures the registration of the Czech company and the opening of a corporate bank account within 6 weeks  However, the time taken for the approval of the license application would totally depend on the authorities’ review. 

• As a general rule, NRA along with FSC reviews the application within 2 to 3 months. If the applicant meets all the requirements and the submitted documents are correct, the entity is granted a license. If there were any inaccuracies, the regulatory body may request clarification of any issues. In this regard, it is necessary to describe in detail all the business operations to be carried out by the entity. Our team experts recommend that special attention should be paid to the business plan.

• Before starting the engagement, Tetra Consultants will send you a project plan with the estimated timelines stipulated for company registration, preparation of documents as well as license application. This is to ensure that all parties are clear on the upcoming project. 

How much does it cost to obtain a crypto license in Bulgaria?

• Tetra Consultants will provide you with multiple services ranging from assisting you through the incorporation process to obtaining the crypto License in Bulgaria. The total fee that will be charged is inclusive of the company registration fee, license fee, and any additional cost that may arise.

• We will discuss with you the total engagement fee in detail before we begin the registration process so that you have a better understanding of what you are paying for. Tetra Consultants strives to be transparent with the engagement fees prior to the start of any engagements. All these terms and conditions will be stated clearly in our appointment letter. 

Looking to apply for a crypto license in Bulgaria?

• Tetra Consultants specialize in providing comprehensive solutions for cryptocurrency businesses seeking to obtain a crypto license in Bulgaria and other ancillary services. With our deep expertise in the regulatory landscape and extensive knowledge of the licensing process, we are your trusted partner in navigating the complexities of the Bulgarian market. Our dedicated team of professionals is committed to assisting you at every stage, from initial consultations to the successful acquisition of your crypto license in Bulgaria. 

• We understand the unique challenges faced by entrepreneurs in the cryptocurrency industry and strive to simplify the process by ensuring compliance with the stringent requirements set by the Bulgarian authorities. In addition to license acquisition, we offer a suite of ancillary services, including corporate bank account opening, nominee director services, provision of company secretary and registered office as well as ongoing regulatory compliance consulting services. With our guidance and support, you can confidently navigate the regulatory framework, streamline your operations, and focus on your core business activities. Trust Tetra Consultants to be your reliable partner in establishing and growing your compliant and successful cryptocurrency venture in Bulgaria.

• Tetra Consultants’ team of licensing experts is proficient in assisting financial service organizations with attaining various offshore financial licenses depending on long-term business needs and goals. 

Find out more!

• Contact us to find out more about how to get a crypto License in Bulgaria. Our team of experts will revert within the next 24 hours.

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