Hungary’s Cryptocurrency Regulations
Hungary’s recent amendments to its criminal code regarding cryptocurrency regulations may pose challenges for the nation’s crypto landscape, warns the Blockchain Hungary Association. In an interview with Decrypt, Kornél Kalocsai, the association’s president, expressed his cautious support for the new laws, stating that while they come with stringent penalties for operating unlicensed trading platforms—potentially leading to prison sentences of up to five years for individual investors trading over approximately $1.45 million (or 500 million forints) and up to eight years for service providers—they are primarily aimed at curbing illegal activities within the sector.
Impact on the Crypto Market
The revised legislation has already led to significant changes, including Revolut’s decision to halt its cryptocurrency services in Hungary. Despite these developments, Kalocsai believes that the amendments do not inherently drive away legitimate exchanges and platforms. Instead, he emphasized that the focus of the law is to promote legal certainty and support businesses that adhere to EU laws, notably the MiCA regulation and anti-money laundering standards.
Concerns and Clarifications
However, Kalocsai pointed out that the law has only passed at the statutory level and that the details of the implementation decree remain undisclosed. This lack of clarity raises concerns that the practical application of the law could be more stringent than expected, potentially leading to adverse effects such as a temporary decline in market activity.
“Clarification of the legal text and transparent communication are vital to prevent the exodus of market participants and encourage compliance rather than leaving the regulated environment,”
he noted.
Uncertainty looms further as the Supervisory Authority for Regulated Activities has yet to establish licensing application guidelines, increasing the apprehension among local cryptocurrency businesses. Kalocsai disputed the notion that the criminal code would severely dampen the industry, stating that its primary intention is to redirect participants from unregulated markets toward more reputable frameworks. He clarified that the amendments do not ban the holding or trading of cryptocurrencies, but specifically target unauthorized service provisions.
Exemptions and Future Outlook
Notably, transactions below a threshold of approximately $14,250 (5 million forints) are exempt from these regulations, preserving some level of activity for smaller-scale users. The law’s focus is particularly on service providers engaged in regular crypto exchange activities for profit, which could create potential complications for individuals and entities operating on peer-to-peer models, possibly forcing them into more formal business structures.
Looking ahead, Kalocsai believes that investors will still have access to international exchanges that align with EU standards or that secure the necessary local registration in Hungary, once the licensing guidelines are released. He cautioned, however, about the existing ambiguities in defining who qualifies as a service provider and how terms like ‘business activity’ or ‘currency exchange’ will be practically applied, despite these definitions already being established at the EU level through the MiCA regulations.
Conclusion
In conclusion, Kalocsai reassured that cryptocurrency exchanges already holding EU licenses would continue to have the opportunity to operate in Hungary once MiCA is fully implemented, which is projected for 2026. He provided an example, noting that exchanges licensed in countries like France or Germany would be permitted to function in Hungary if they satisfy local registration requirements.
