Related to cryptocurrency trading, Bulgaria is an active player in the fintech industry. This jurisdiction is known for many companies working in the cryptocurrency exchange sector and international conferences taking place. This article will surely be useful for entrepreneurs who are planning to register a crypto-company in Bulgaria; especially for those who are interested in how legal the crypto-mining is in Bulgaria.
As for now, transactions with cryptocurrencies such as selling, buying, or paying with it are not subject to licensing requirements. The reason for that is the fact that Bulgaria does not currently have any comprehensive regulatory framework for the fintech sector.
To set a strategy for the cryptocurrency business development, the Financial Supervision Commission of Bulgaria published a document that talked about:
- Managing cyber risks, creating a safe place to trade cryptocurrency;
- Developing procedures for licensing of crypto companies that offer innovative products in finance;
- Preparing a comprehensive regulatory framework and control mechanisms.
The EU Package
For businessmen coming to Bulgaria or other EU countries for crypto activities, it would be useful to remember that earlier this year the European Commission issued the Digital Finance Development Package. This package includes the Digital Finance Strategy and bills for crypto-asset regulations and cybersecurity measures.
As the EU stated, the new package aims to supplement the current legal framework for crypto-assets as well as prevent the fragmentation of regulations. Such fragmentations can create loopholes in legislation leading to fraudulent activities.
The Package is mainly focused on:
- Creating an effective system to protect consumers’ and investors’ rights;
- Facilitating the safe development of cryptocurrencies by ensuring legal certainty – reducing risks for financial stability deterioration connected to the use of DLT and cryptocurrencies;
- Supporting the creation of a fair competitive environment and innovation development in the field of crypto asset emission and services.
This act eliminates the regulatory obstacles established earlier. These obstacles were connected to the issuing and trading of crypto-assets considered financial instruments. However, this piece of legislation maintains the principles of technological neutrality meaning that consumers are free to choose the technologies that suit their needs in the best way. Moreover, the package brings ICO and STO accounts of companies more opportunities to attract financing. Furthermore, another goal was incorporated into the document: to build a framework for monitoring fraudulent activities and unfair practices involved in the crypto-asset sphere.
The mining law
Momentarily, Bulgaria does not have any laws regulating cryptocurrency mining directly. In fact, the courts in Bulgaria use precedents and decisions made by some regular authorities in the country.
Some regulatory and legal risks are connected to the mining of cryptocurrency. But, if it proved to be directly related to the taxpayer, cryptocurrency mining can be provided for VAT purposes. Cryptocurrency mining can be a part of a business entity if it is a registered private limited company in Bulgaria. Today, licensing is not required by the Bulgarian legislation to register a crypto activity company there. However, this situation might change in the nearest time.
All in all, Bulgarian legislation does not prohibit cryptocurrency mining. This activity is lawful and is regulated by common law (also including tax liability).
To order a consultation on crypto-activity regulation in Bulgaria, do not hesitate to contact COREDO.