Crypto license in Bulgaria

Bulgaria’s licensing and compliance regime for crypto businesses is robust and transparent. Key requirements:

• Customer Due Diligence (CDD): Identify all clients and beneficial owners. Ongoing monitoring is required.
• Internal policies: Strict rules for risk management, governance, internal audit, and reporting suspicious transactions.
• IT and security: Resilient IT infrastructure, cyber security controls, disaster recovery and business continuity plans.
• Record keeping: Maintain customer and transaction data for at least five years.
• Transparent governance: A clear company structure, outlining decision-makers and controls for conflicts of interest.
• Periodic reporting: Ongoing communication with the FSC and immediate reporting of breaches or suspicious activities.

Bulgaria offers some of the most attractive tax conditions in the EU:

• Corporate tax: 10% flat rate for companies.
• Personal income tax: 10% flat rate.
• VAT: 20% standard, but many crypto financial services are VAT-exempt.
• Withholding tax: 5% on distributed dividends.
• Crypto-specific taxation: Income from crypto trading, staking, and mining is taxable. Profits from selling crypto are considered proceeds from financial assets, offset by losses. There is no advance tax on crypto transactions, but accurate financial documentation and reporting are mandatory.
• Accounting obligations: All crypto assets must be booked as intangible assets and revalued at fair market value.

Under the MiCA regime and local law, authorized companies can provide:

• Exchange services between crypto and fiat currencies
• Crypto-to-crypto exchanges
• Custodial wallet services
• Portfolio and asset management
• Crypto payment services
• Project funding and token offerings (ICOs, IDOs)
• Advisory and brokerage services

Each activity must be described in the licensing application, and all technical and compliance requirements must be satisfied.

• Full EU access: Passport your license and provide services across the European Economic Area.
• Transparent legal regime: No need to worry about ambiguous rules or unpredictable enforcement.
• Competitive tax rates: Low corporate and personal tax.
• Favorable company law: Simple and fast company setup. No residency requirements for founders.
• Talented workforce: Strong IT and fintech ecosystem.
• Fast licensing: Clear procedures and timelines for approval.

Common reasons for license refusal or revocation

• Inadequate AML/KYC policies
• Incomplete or incorrect information in the application
• Unqualified or unfit management
• Evidence of law breaches, especially in AML/CFT
• Providing misleading information to regulatory authorities

Registration may also be withdrawn at the company’s request (e.g. business closure) or by order of the FSC if the law is not observed.

1. Choose the right corporate structure and reserve a company name.
2. Draft internal AML/CFT policies.
3. Open a corporate bank account.
4. Gather personal documents for management and UBOs.
5. Complete licensing application for the Financial Supervision Commission.
6. Set up operational procedures (IT, compliance, audit).
7. Ensure ongoing compliance and prepare for future MiCA regulatory updates.

Future outlook

The crypto regulatory landscape in Bulgaria is evolving in harmony with EU law, especially as MiCA becomes uniformly enforced. Businesses that act early, follow compliance strictly, and maintain transparent governance will be best positioned to succeed.

If you’re considering entering the Bulgarian or broader European crypto markets, understanding and preparing for the licensing process is essential. Our team at Legarithm specializes in guiding crypto projects from incorporation to full operational readiness, ensuring long-term compliance and business growth.

Contact us for a personal consultation and start the process with confidence.