- Hungary makes unauthorized crypto trading illegal, and prison terms reach eight years.
- Hungarian National Bank controls crypto licenses, yet the guidelines remain very unclear.
- Revolut, Bitstamp suspend Hungarian crypto services due to confusing new rules.
Hungary has just passed a strict new law that is shaking its crypto community. Starting from July 1st, it is now a criminal offense to trade cryptocurrency or run crypto services without permission from the government. This implies that individuals who violate this law might get up to five years in prison. In case an organization offers unlicensed crypto services, its executives might be imprisoned for up to eight years.
Hungarian Bank Takes Charge of All Crypto Licensing
The central duty to monitor the crypto market has been accorded to the Hungarian National Bank. Now, all those who wish to run a crypto service in Hungary will be required to apply to the National Bank for a special license. But there is a large issue. The instructions on how to obtain this license are not clear yet. This has baffled most businesspeople and made them concerned about the future.
Due to this ambiguity, there are already big firms that have suspended their crypto activities in Hungary. One of them is Revolut. Revolut is a widely known London digital bank. It has two million Hungarian clients who use its app to bank and trade crypto. Revolut has reported that it will temporarily suspend all crypto trading, staking, and new deposits for Hungarian customers. Individuals are still able to sell the crypto they already have in their possession or transfer it to another wallet, but they cannot purchase additional crypto via Revolut at the moment. Revolut has stated that it is facing a lot of difficulties in restoring crypto services, and it has not given any date.
Another well-known crypto exchange, Bitstamp, has taken the same step. It has also ceased to cater to the Hungarian residents temporarily. Other companies are also likely to follow suit, according to many experts. The reason behind it is that the new regulations are strict, but the procedure of getting approval remains vague.
Hungarian Central Bank Rejects Crypto, Sticks to Gold and Cash Reserves
The new law also lists two crimes for crypto. The first is called abuse of crypto assets. The second is offering unlicensed crypto-exchange services. When a person engages in an illegal exchange in basic trades, he or she may be imprisoned for a maximum of two years. In case of a trade of more than fifty million Hungarian forints, which would be about one hundred and forty thousand dollars, the punishment may be extended to three years. In larger deals exceeding five hundred million forints, the sentence may be up to five years.
This action by Hungary is not the same as that of the European Union. The EU is in the process of creating new regulations known as MiCA that will provide clear and equal crypto rules in all EU member countries. Many believe that Hungary is moving in the wrong direction, establishing severe constraints rather than transparent regulations. According to some experts, these new laws can drive away businesses and complicate the expansion of the tech sector in Hungary.
Even the Hungarian Central Bank has clarified its stand. It declared earlier this month that it will not hold any crypto in its official reserves. The bank claimed that crypto is too volatile and is not properly regulated. Then the bank will specialize in less risky assets such as gold and cash.