Crypto law is now a reality: Parliament grants the FSC the controversial right to block websites

The National Assembly has finally given the green light to the Crypto Asset Markets Act, which will regulate trading and services related to cryptocurrencies in the country. The legislation is the first of its kind related to the crypto industry, coming in response to the European Regulation on Markets in Crypto Assets (MiCA) and Bulgaria's obligation as an EU member state to transpose it into national law.

There was understanding of the need for it, but MPs nevertheless clashed over the powers of the Financial Supervision Commission (FSC). The opposition, represented by “We Continue the Change - Democratic Bulgaria” (PP-DB) and “Vazrazhdane”, warned of the risks of abuse and potential use of the regulator as a “big stick” against inconvenient market players.

Brief overview of the new law

The law regulates the conditions and procedures for the public offering of crypto assets and admission to trading on a crypto asset trading platform, the licensing and state supervision of crypto asset issuers and crypto asset service providers.

Its aim is to protect the interests of crypto asset holders and customers of crypto asset service providers, as well as to ensure conditions for the development of a transparent and efficient crypto asset market.

In a broader sense, the aim of the law is to create a harmonized regulatory framework for the entire European market.

It introduces clear rules for the public offering of crypto assets, as well as for the licensing and state supervision of issuers and providers of related services.

The FSC is the supervisory authority that will issue licenses, revoke them, and monitor the entire process of supervision, licensing, offering, and trading, while the Bulgarian National Bank will supervise electronic money token issuers.

The FSC will be able to propose to the BNB that issued licenses be revoked. In urgent cases to protect consumers or prevent market disruptions, the commission will have the right to ask the court to freeze the assets of companies. Court requests will be considered immediately, and injunctions will be enforced immediately by a bailiff.

Significant financial penalties of up to BGN 30 million or 15% of the offender's annual turnover are also provided for.

The bone of contention

The most controversial aspect of the new law is the FSC's right to shut down websites without asking the court. When it considers that consumers are at risk and cannot stop the violations in any other way, the Commission will have the right to order:

• Closure or blocking of websites;
• Closure of social media accounts;
• Removal of mobile applications;
• Deletion of internet addresses.

It will be able to order this to companies that provide hosting services, online platforms, and mobile operators.

The problem, according to the opposition, is that the FSC will be able to do all this without seeking permission from the court – either before or after.

This means that the Commission will decide on its own which websites to shut down, without the need for a court to confirm these actions.

The PP-DB and Vazrazhdane suspect that such powers could be used to repress inconvenient companies or media, becoming a tool for censorship.

“Why are you removing judicial control and giving the FSC the right, at its discretion and at its own discretion, to go into any company, which could turn into censorship and have many unpleasant consequences and harms,” commented Martin Dimitrov of the PP-DB.

What happens if the FSC abuses these texts?”

Bozhidar Bozhanov (PP-DB) proposed an amendment to introduce judicial control by the Sofia District Court, which would confirm or reject the FSC's measures within 72 hours. However, his proposal was not accepted.

Georgi Chrisimirov from Vazrazhdane recalled that the original text of the bill provided for judicial control, which was subsequently removed. Delian Dobrev (GERB-SDS), who introduced the bill, defended the change, stating that the texts had been submitted at the suggestion of the FSC and the Communications Regulation Commission (CRC). He emphasized that similar measures were already in place for insurers and financial intermediaries.

Despite the criticism, the controversial text was finally approved by the ruling majority.

Translated with DeepL.