On the last day of 2024, the Council of Ministers submitted to the National Assembly a draft Law on the Markets in Crypto-Assets. Such legislation has been long-awaited and is directly tied to the measures outlined in Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets and amending Regulations (EU) No. 1093/2010 and (EU) No. 1095/2010, as well as Directives 2013/36/EU and (EU) 2019/1937 (OJ, L 150/40 of 9 June 2023). Given the workload of the National Assembly, it is uncertain how long it will take to finalize the text and whether the initial proposal by the Council of Ministers will be amended or supplemented.
Scope of the Law
The law will regulate the licensing, operation, and state supervision of crypto-asset issuers and service providers.
Objectives of the Law
The new legislation aims to:
- Protect the interests of crypto-asset holders and clients of crypto-asset service providers.
- Ensure conditions for the development of a transparent and efficient crypto-asset market.
- Maintain stability, transparency, and trust in the crypto-asset market.
- Foster innovation and fair competition in crypto-asset markets.
Regulatory Authorities
The draft law designates the Financial Supervision Commission (FSC) as the primary authority responsible for enforcing the Regulation and the law. In specific cases, the Bulgarian National Bank will have special powers.
Licensing Regime
Asset-Referenced Tokens
The licensing and supervision of entities conducting public offerings of asset-referenced tokens or seeking their admission to trading will be handled by the FSC in accordance with the Regulation.
Crypto-Asset
Entities operating as crypto-asset service providers will also be licensed and supervised by the FSC in accordance with the Regulation.
A licensed crypto-asset service provider must submit an application to the Commercial Register within 7 days of receiving the license, or upon confirmation from the FSC, to include this activity in its business scope.
The Commercial Register will record the right to operate as a crypto-asset service provider after the license or confirmation from the FSC is presented.
Requirements for Management and Shareholders
Members of the management bodies of crypto-asset service providers, those managing their activities, shareholders, or persons with direct or indirect qualified participation must meet stringent requirements outlined in the Regulation and the law.
Sanctions
Sanctions for violating the provisions of the law and the Regulation are substantial, reaching up to BGN 30 million or 15% of the annual turnover of the entity, as determined by its latest report approved by the governing body, depending on the violation’s severity and the criteria for penalty determination.
Limitation Period for Violations
The limitation period for initiating administrative proceedings or discontinuing such proceedings is the longer of 2 years from the violation.
License Fees
The fees for issuing licenses are proposed as follows:
- Class 1, 2, and 3 licenses: BGN 5,000–30,000.
- Expanding the scope of a license: BGN 8,000–25,000.
Issuing licenses for public offerings or admission to trading of asset-referenced tokens: BGN 25,000.
Amendments to AML Measures
The law introduces changes to the Anti-Money Laundering Act (AMLA), adding licensed crypto-asset service providers to the list of obligated entities, except for their advisory activities on crypto-assets. These entities will have specific obligations to identify and assess risks related to money laundering and terrorist financing, especially for transfers involving self-hosted addresses. Enhanced customer due diligence measures must also be applied for crypto-asset services.
Internal Risk Management Systems
Obligated entities must establish internal systems for assessing risks associated with self-hosted address transfers and develop policies and procedures to terminate correspondent relationships for reasons related to combating money laundering and terrorist financing.
Transitional Provisions
Administrative proceedings under Article 9a of the AMLA that are not concluded by 30 December 2024 will be discontinued after the new law enters into force.
