On 20 August 2024, the Bulgarian Council of Ministers unveiled a draft law implementing the provisions of Regulation (EU) 2023/1114 on markets in crypto-assets (MiCAR) and Regulation (EU) 2023/1113 on information accompanying transfers of funds (TFR). The proposed legislation on markets in crypto-assets (MiCA) is anticipated to enter into force on 30 December 2024, marking a significant step forward in establishing a robust and transparent regulatory environment for crypto-assets, their issuers, and service providers.
National competent authorities
The Bulgarian legislator has approached the robust licensing regime under MiCAR in an unusual way by appointing two different national competent authorities (NCAs) for the separate licensing procedures under MiCAR. The Financial Supervision Commission (FSC) is the appointed regulator for licensing crypto-asset service providers (CASPs) and issuers of asset-referenced tokens and crypto-assets other than asset-referenced tokens or e-money tokens, while the Bulgarian National Bank will be responsible for licensing issuers of e-money tokens.
Application documents
In addition to the mandatory documentation for licensing applications under MiCAR, the draft law details further documents and requirements to assess and confirm a CASP’s proper governance. They apply to the managing body, shareholders, and ultimate beneficial owners of the applicant CASP. Some of these documents were already required for registering as a virtual asset service provider (VASP) under the current compliance regime. Thus, registered VASPs could potentially take advantage of Article 62(4) MiCAR and avoid re-submission of some of the documents previously provided.
Applications to the FSC will be open from 31 December 2024, but document preparation could be initiated beforehand.
Transitional provisions
The grandfathering period for registered VASPs is to expire on 31 December 2025, meaning the legislator has shortened the 18-month period originally considered to 12 months, following ESMA’s recommendations.
The current VASP register will be closed on 30 December 2024 and transferred to the FSC. Any changes to activities of VASPs as filed in the register must then be notified to the FSC.
Administrative fees
The MiCA draft law provides for the following FSC licensing fees (approx. in EUR):
Tier 1 CASPs – EUR 2,500
Tier 2 CASPs – EUR 5,000
Tier 3 CASPs – EUR 15,000
Key amendments and regulatory changes
In addition to incorporating the provisions of MiCAR and TFR, the draft law also introduces amendments to several existing laws to ensure a comprehensive regulatory framework for crypto-assets. These amendments aim to recognize crypto-assets and CASPs as regulated activities and effectively align Bulgarian legislation with MiCAR and TFR. The laws to be amended include the Markets in Financial Instruments Act, the Measures Against Money Laundering Act, and the Public Offering of Securities Act. The amendments also align with the implementation of Regulation (EU) 2022/2554 on digital operational resilience for the financial sector. This positions the MiCA draft law as a crucial piece of legislation, effectively harmonizing Bulgarian finance law with pivotal EU digital acts.
For more information on MiCA licensing procedures in Bulgaria, contact your local CMS experts: Dimitar Zwiatkow and Elitsa Hinova
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