Crypto-Assets in Commercial Dealings – Asset, Security, Insolvency

Crypto-assets have now firmly left the “grey zone” of theory and entered real commercial and judicial practice. Since 30 December 2024, Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA) has applied throughout the European Union, and since 8 July 2025 Bulgaria has had the Markets in Crypto-Assets Act, published in State Gazette No. 54 of 4 July 2025, which introduces a licensing regime and supervision by the Financial Supervision Commission and the Bulgarian National Bank. The regulatory framework, however, answers only some of the questions. Can cryptocurrency serve as security in a commercial transaction? What kind of contract do you conclude when performance is in bitcoin? And what happens to the debtor's crypto wallet when it becomes insolvent? This article examines precisely these practical questions.

Basic Points – What a Crypto-Asset Is in Law

Under MiCA, a crypto-asset is a digital representation of a value or of a right that can be transferred and stored electronically using distributed ledger technology (blockchain) or similar technology. The Regulation distinguishes three main categories.

• Asset-referenced tokens (ART) – which aim to maintain a stable value by referencing another value or right
• E-money tokens (EMT) – which reference a single official currency
• Other crypto-assets – the residual category, which includes the most widespread cryptocurrencies such as bitcoin and ether

Several starting points are important for commercial practice.

• Cryptocurrency is not legal tender. No creditor is obliged to accept payment in crypto-assets unless it has expressly agreed to do so.
• Cryptocurrency is not a thing in the classical sense. It has no material substance, so property law institutions (possession, ownership, possessory pledge) apply to it only with difficulty and by analogy.
• It is, however, undoubtedly a property right with a monetary value. It forms part of its holder's assets, can be transferred, inherited and divided, and can be subject to enforcement.
• MiCA and the Markets in Crypto-Assets Act govern the public-law regime (licensing, supervision, investor protection) but not the private-law regime. Questions of ownership, security and enforcement remain subject to the general rules of national law.

Since the judgment of the Court of Justice of the EU in Case C-264/14 Hedqvist, it has been accepted that virtual currencies function as a contractual means of payment. The parties may validly agree to exchange goods and services for them, and the exchange of cryptocurrency for official currency is a VAT-exempt supply. In Bulgaria, the National Revenue Agency consistently treats income from the sale of virtual currencies as taxable, which only confirms that for the state crypto is a fully fledged economic asset.

Cryptocurrency as an Asset in Commercial Transactions

There is nothing to prevent businesses from agreeing performance in crypto-assets. Practice already includes payment of the price under a sale contract in bitcoin, settlement of mutual obligations by transferring tokens and even fees for services in cryptocurrency. When structuring such transactions, however, several specific features must be taken into account.

• Volatility calls for an express agreement on the conversion rate, at what point and by reference to which market source the value of the token is determined (conclusion of the contract, due date, actual performance).
• Specification of performance – the contract must state the exact type and quantity of the crypto-asset (for example, 1.5 BTC rather than “cryptocurrency worth EUR X”) and the wallet address for performance.
• Time of performance – for blockchain transactions, it is advisable to agree that the obligation is deemed performed when the transaction is confirmed on the network, not when it is initiated.
• Regulatory status of the counterparty – where the counterparty provides exchange, custody or trading services in crypto-assets by way of business, from 1 July 2026 it must hold a licence as a crypto-asset service provider (CASP). Until then, the transitional regime under the Markets in Crypto-Assets Act allowed persons entered in the former register at the National Revenue Agency under the Measures Against Money Laundering Act to continue operating without a licence. Today, checking whether the provider is licensed, in the lists maintained by the Financial Supervision Commission, is a mandatory element of every business's due diligence.

The question of contributing crypto-assets in kind to the capital of a commercial company remains debated. Insofar as a non-cash contribution under the Commerce Act requires a transferable property right with a monetary value assessed by three experts, the more recent view allows such a contribution, but registration practice is not yet consistent. If you are considering such a structure, seek prior advice on corporate law to avoid a refusal of registration.

Can Cryptocurrency Be Used as Security?

This is where Bulgarian law lags most noticeably behind economic reality. The classic security institutions were designed for things and receivables, and a crypto-asset is neither in pure form.

A possessory pledge under the Obligations and Contracts Act requires the pledged thing to be handed over to the creditor. The technical equivalent would be transferring the tokens to a wallet controlled by the creditor or handing over the private key. Such a construct works economically, but its legal characterisation is uncertain. Since a crypto-asset is not a thing, it is debatable whether a pledge with priority in enforcement arises at all.

A special pledge is even more problematic. Art. 4 of the Special Pledges Act lists exhaustively what may be pledged, namely movable things, machinery and equipment, receivables, dematerialised securities, shares in companies, industrial property rights, commercial enterprises, aggregates and others. Crypto-assets are not on this list, so a direct special pledge over bitcoin cannot be created and entered in the Central Register of Special Pledges.

Practice compensates with several workable substitute structures.

• Pledge of a receivable – where the crypto-assets are held by a licensed custody service provider, the client has a claim against it for their return. That claim is an entirely suitable subject of both a pledge under the Obligations and Contracts Act and a special pledge under Art. 4(1)(3) of the Special Pledges Act. This is also the most secure route for the creditor today.
• Security (fiduciary) transfer – the debtor transfers the tokens to the creditor with an obligation to transfer them back once the debt is repaid. The construct is permissible under freedom of contract but carries a risk of recharacterisation and gives the creditor no priority in competition with other creditors.
• Escrow solutions – the tokens are locked with a third party (a licensed custodian) or in a multisig wallet requiring the signature of both parties for any transaction, combined with a clear contractual framework for when the creditor obtains access.
• Pledge of the shares or the commercial enterprise of the company holding the crypto-assets, an indirect but registrable and enforceable security.

The special rule in Art. 13 of the Markets in Crypto-Assets Act also deserves attention. The reserve of assets maintained by an issuer of asset-referenced tokens may not be subject to enforcement for the issuer's own obligations. The legislator expressly protects the holders of such tokens, a sign that the security function of crypto-assets is already being regulated selectively in Bulgaria.

Legal Characterisation of Contracts Concerning Crypto-Assets

How the contract is characterised determines which rules apply in the event of non-performance, so the question is by no means academic.

• Sale of crypto-assets for money – formally, a sale under the Obligations and Contracts Act and the Commerce Act concerns things and rights. The prevailing view is that this is an innominate contract to which the rules on sale apply mutatis mutandis, including liability for non-performance and rescission under Art. 87 of the Obligations and Contracts Act.
• Exchange of goods or services for cryptocurrency – performance in crypto is not a “price” in the strict sense (a price is agreed in money), so the contract tends towards barter or, again, an innominate contract. The practical significance is that, in a dispute, the court will look for the parties' actual common intention, and a well-drafted contract proves it.
• Loan of cryptocurrency – tokens are generic and fungible by nature, so courts apply by analogy the regime of the loan for consumption under Art. 240 of the Obligations and Contracts Act. The same quantity of tokens of the same kind is returned or, where that is impossible, their monetary equivalent. Bulgarian courts have already heard claims for the return of cryptocurrency, including under the rules on unjust enrichment in Art. 55 of the Obligations and Contracts Act where performance was rendered without a valid basis.
• Custody and exchange contracts – following MiCA and the Markets in Crypto-Assets Act, these are regulated services with mandatory minimum content, client information requirements and provider liability, including for the loss of crypto-assets held in custody.

The common denominator is that the more precisely the contract describes the performance, the rate, the time of performance and the consequences of non-performance, the less room there is for disputes over characterisation. That is why drafting such contracts is work for a commercial law specialist.

Enforcement Against Crypto-Assets

The Civil Procedure Code contains no special rules on crypto-assets, but the general principle is clear. Enforcement may be directed against any of the debtor's property rights that are not exempt from enforcement. In practice, two substantially different scenarios emerge.

• Crypto-assets held with a licensed provider (an exchange or custodian) – the bailiff imposes a garnishment under the rules on garnishment of receivables, notifying the provider as a third-party debtor. On receipt of the garnishment notice, the provider must block the debtor's access and prevent any disposals, and a debtor who transfers the tokens despite the garnishment also risks criminal liability. The list of licensed providers at the Financial Supervision Commission in practice plays the role that the bank register plays for account garnishments.
• Self-custody – where only the debtor knows the private key, enforcement depends on the debtor's cooperation. The bailiff may search for key storage devices during an inventory, but if the debtor does not cooperate, the practical obstacles are often insurmountable. That is why it is critical for creditors to gather information about the debtor's crypto-assets before enforcement, including through contractual clauses requiring wallets to be declared when the transaction is concluded.

After seizure or garnishment, the assets are realised by sale under the Civil Procedure Code, and the proceeds are used to satisfy the creditor. Our team assists creditors in such proceedings as part of our debt collection and dispute resolution services.

Crypto-Assets in Insolvency

When a business holding a crypto wallet becomes insolvent, the general rules of Part Four of the Commerce Act apply, but with specific complications.

• The insolvency estate under Art. 614 of the Commerce Act covers all the debtor's property rights at the date of the decision opening the proceedings, as well as those acquired afterwards. Crypto-assets undoubtedly fall within it.
• Tracing is the weakest link. The trustee depends on the debtor's cooperation and on the traces in the accounts, bank statements and correspondence with exchanges. The debtor must provide information about its assets, and concealing crypto-assets may also engage the managing director's personal liability.
• Valuation and realisation are complicated by volatility. The value of the wallet may change dramatically between the opening of the proceedings and the sale. The trustee should act quickly and document the market price at each relevant point.
• Avoidance actions under Art. 646 and Art. 647 of the Commerce Act apply fully to crypto transactions too. Transfers of tokens to related parties in the suspect period before insolvency may be challenged, although tracing on the blockchain requires specialised expertise.
• Secured creditors retain their priority only if the security was validly created, another reason why the security structure (pledge of a receivable, fiduciary transfer, escrow) should be chosen carefully when negotiating the transaction.

Practical Advice Before Contracting in Crypto-Assets

Experience from the first court cases in Bulgaria highlights the mistakes that cost the most.

• Do not accept a crypto-asset as security without being aware that a direct special pledge over it cannot be registered. Structure the security through a claim against a licensed custodian or through shares in the holding company.
• Always agree in writing the type and quantity of tokens, the wallets for performance, the time of performance and the mechanism for conversion in case of volatility.
• Check in the Financial Supervision Commission's lists whether your counterparty is a licensed provider. After 1 July 2026, dealing with an unlicensed provider is a legal and reputational risk in its own right.
• Include clauses requiring the debtor to declare its crypto wallets and to cooperate in enforcement, which considerably improve the chances of actually recovering the claim.
• In a dispute, act quickly. Interim measures over crypto-assets are effective only until the assets are moved to a self-custody wallet or outside the jurisdiction.

Crypto-assets are now a fully fledged part of commercial dealings, but their legal framework is still being assembled on the move. The combination of the directly applicable MiCA, the new Markets in Crypto-Assets Act and the classic institutions of the Obligations and Contracts Act, the Special Pledges Act, the Civil Procedure Code and the Commerce Act calls for careful contracting today, so that you do not find yourself tomorrow as a creditor holding an economically valuable but legally unreachable asset.