The long-awaited Crypto Asset Markets Act (“CAMA”) has entered into force, implementing Regulation (EU) 2023/1114 on markets in crypto assets (“Regulation”). This creates, for the first time in Bulgaria, a unified legal framework in a sector that until recently was sparsely regulated, even at the European Union level.
The main objective of CAMA is to protect the interests of investors – both holders of crypto assets and customers of crypto asset service providers. The main expected effects include the introduction of clear rules and risk management measures in the sector, improving market transparency, and increasing investor confidence, which in turn aims to stimulate the development of the entire ecosystem. From the perspective of crypto service providers, the new legal framework will provide significantly greater security and transparency, as they will operate within a predictable and effective regulatory environment.
As a general rule, the new law contains numerous references to the Regulation, explicitly regulating only those issues left to the discretion and judgment of each individual Member State.
In this context, CAMA provides for that the Financial Supervision Commission (“FSC”) shall be the competent authority responsible for supervising compliance with the new law and the subordinate legislation regarding its application. Furthermore, FSC will have a commitment for cooperation with the European Banking Authority and the European Securities and Markets Authority. Except for the above cases, the Bulgarian National Bank will exercise supervision as the competent authority in relation to issuers of electronic money tokens (Article 182a of the Payment Services and Payment Systems Act).
With regard to substantive regulation, CAMA (based on the Regulation) regulates three main types of tokens:
(i) crypto-assets other than asset-referenced tokens or e-money tokens;
(ii) asset-referenced tokens;
(iii) electronic money tokens.
For each type of token, CAMA and the Regulation provide for specific requirements for public offering and/or admission to trading, as well as requirements regarding the asset reserves that must be maintained by the issuer of a given token.
A number of standards are also being introduced for participants in the crypto asset market, including an obligation to publish a white paper on crypto assets, requirements for marketing communications, and measures to prevent market abuse. The so-called "whitepaper" should contain information about the asset in question, the associated risks, and the rights of investors. Advertisements and other marketing materials must be clear, accurate, and non-manipulative, consistent with the information in the whitepaper.
CAMA also regulates the licensing of crypto asset service providers – the procedure is again conducted before FSC. Such providers may provide certain types of crypto services, including: (i) custody and administration of crypto assets on behalf of clients, (ii) management of a crypto asset trading platform, (iii) exchange of crypto assets for funds, (iv) exchange of crypto assets for other crypto assets, (v) execution of orders related to crypto assets on behalf of clients, (vi) placement of crypto assets, (vii) provision of advice on crypto assets, (viii) portfolio management related to crypto assets, etc.
The entities that can provide such services for crypto assets within the EU are: (i) a licensed legal entity or other undertaking as a crypto asset service provider, (ii) a credit institution, (iii) a central securities depository, (iv) an investment intermediary, (v) a market operator, (vi) an electronic money institution, (vii) a management company of an undertaking for collective investment in transferable securities (UCITS), or (viii) a person managing an alternative investment fund that is licensed to provide crypto asset services.
Persons engaged in the provision of crypto services who are entered in the electronic public register of the National Revenue Agency in the period from December 30, 2024 to the date of entry into force of CAMA, are required to submit an application for a license under CAMA within three months of the entry into force of the new law. Within the same period, these companies shall bring their activities into compliance with CAMA and the Regulation. Companies entered in this register before December 30, 2024, may continue to carry out the activities for which they are entered in the register on the territory of Bulgaria without a license until July 1, 2026, or until the issuance or refusal to issue a license, respectively.
In addition to its powers to issue, refuse, and revoke licenses, the FSC also has the right to impose coercive administrative measures and sanctions in the event of violations.
CAMA also contains provisions on the submission of complaints and reports by crypto asset holders, users of crypto asset services, and other interested parties, including consumer associations, to the FSC regarding violations of the Regulation, CAMA or the acts implementing them.
With the adoption of CAMA, Bulgaria is taking an important step towards creating conditions for the sustainable development of the crypto asset market by applying European regulations and international best practices. This will not only provide better protection for investors, but will also encourage innovation and fair competition in the sector.
