Hungary has implemented stringent new cryptocurrency regulations. The updated law imposes severe legal consequences for individuals involved in the unauthorized exchange of crypto-assets and those operating crypto exchange services without proper validation or authorization.
This includes prison sentences of up to five years for individuals and eight years for service providers. However, there are concerns about its practical implementation as a detailed compliance framework has yet to be released.
Hungary Cracks Down on Unauthorized Crypto Trading
The legislation, effective from July 1, was enacted under amendments to the Hungarian Criminal Code. Under the updated law, individuals engaging in transactions on unauthorized platforms face up to two years in prison for trading values less than 50 million Hungarian forints (approximately $146,000).
Penalties escalate with transaction amount. The person can land in jail for up to three years if the exchange involves a value between 50 million and 500 million forints (approximately $1.46 million).
Furthermore, trades exceeding 500 million forints carry a five-year prison sentence. Meanwhile, service providers operating illegal exchanges could receive sentences of up to eight years, depending on the scale of their operations.
“A person who engages in crypto-asset exchange service activities for a significant value in violation of a validation obligation under the Act on the market of cryptoassets is guilty of a felony and shall be punishable by imprisonment for up to three years. (2) The punishment shall be imprisonment for one to five years for committing a felony…. for a particularly large value. (3) The punishment shall be imprisonment for two to eight years for committing a felony…for a particularly significant value,” the section reads.
With the severity of the penalties, concerns have emerged. Local media, Telex, has raised alarms that the law could affect approximately 500,000 people in Hungary who have legally purchased crypto assets.
Many crypto businesses operating in Hungary are also uncertain about how the law will be enforced and are worried about potential criminal penalties. The Hungarian Financial Supervisory Authority (SZTFH) has 60 days to develop the compliance framework for the new law. However, until that happens, the confusion may likely persist.
Meanwhile, the impact on the market has been immediate. Revolut, a prominent fintech platform, suspended its cryptocurrency services for Hungarian customers following the law’s enactment.
“In accordance with recent changes in Hungarian regulations, we have unfortunately made the decision to suspend all cryptocurrency services for our customers in Hungary,” the statement read.
Portfolio reported on Monday that Revolut has since permitted crypto withdrawals again. However, full-service restoration remains uncertain pending regulatory clarity.
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