Bulgaria is an active participant in the Fintech sector related to cryptocurrency trading. In addition to a number of companies working in the field of crypto token exchange, international conferences on cryptocurrency are held in this jurisdiction. If you are interested in registering a crypto-company in Bulgaria, this article discusses the question of how legal it is to mine cryptocurrency in this country.
Currently, there is no comprehensive regulatory framework that is responsible for regulating the fintech sector in Bulgaria, and transactions using cryptocurrencies such as buying, selling and paying for Bitcoin are not subject to licensing requirements.
The Financial Supervision Commission of Bulgaria has published a strategy for the development of the cryptocurrency business in the country. The main components of this document include:
- cyber risk management, providing a safe space for cryptocurrency trading;
- development of licensing procedures for crypto companies in Bulgaria offering financially innovative products;
- creating a comprehensive regulatory framework and oversight mechanisms.
If you are planning to start crypto activities in the EU, then it will be useful for you to know that earlier this year the European Commission published the Digital Finance Development Package. The package contains the Digital Finance Strategy and bills to regulate cryptoassets and cybersecurity measures.
According to the EU position, the new Package complements the existing regulation in the field of cryptoassets, and is primarily needed to prevent fragmentation of regulation, which creates loopholes for fraudulent activities.
The main goals of the project are:
- ensuring legal certainty to facilitate the safe development of cryptocurrencies, including to reduce the risks of deteriorating financial stability of countries due to the use of cryptocurrencies, as well as digital ledger technologies - DLT;
- supporting the development of innovations and a fair competitive environment by creating a basis for the development of services in the field of crypto assets and their emission;
- creation of an effective system to protect the rights of consumers and investors.
It should be noted that this act eliminates the previously established regulatory obstacles in terms of the issuance and trading of cryptoassets that are classified as financial instruments, while maintaining the principle of technological neutrality, that is, the freedom of consumers to choose the most suitable technologies for their needs, and also expands opportunities to attract financing for ICO and STO account for companies. Particular attention is also paid to building a framework for countering fraudulent activities with cryptoassets and unfair practices.
Limited law for mining
If you are planning to start cryptocurrency activities in Bulgaria, as of today, not a single Bulgarian law directly applies to cryptocurrency mining. Instead, the Bulgarian courts used precedents and decisions of some Bulgarian regulatory authorities.
Cryptocurrency mining carries certain legal and regulatory risks. However, it can be a service that is provided for VAT purposes, provided that it is directly related to the taxpayer.
When registering a private limited company in Bulgaria, cryptocurrency mining can legally be part of such a business entity.
NOTE: At the moment, registration of a Bulgarian company for crypto activity does not require licensing but the situation is likely to change quite soon.
Currently, cryptocurrency mining is not prohibited by Bulgarian legislation. This is a lawful activity subject to common law (including but not limited to tax liability). You can order a consultation on the regulation of crypto-activity in Bulgaria from our specialists at the contacts indicated on the website.