Original article: Hassan Shittu, cryptonews
Translated by: Yuliya, PANews
Hungary has suddenly turned to criminal sanctions against unauthorized crypto activities, becoming one of the most aggressive countries in the EU, turning everyday crypto trading into a potential legal minefield. According to the latest legal provisions, engaging in crypto trading on unlicensed platforms could lead to up to 8 years in prison. This new regulation has forced several large fintech companies to suspend services, affecting millions of users.
This new regulation took effect on July 1, causing shockwaves in the fintech industry. Insiders warn that it could lead to a massive withdrawal of funds, leaving investors in a state of legal confusion.
Hungary criminalizes unauthorized crypto trading with a maximum sentence of 8 years.
According to Hungary's latest revised Penal Code, two new offenses have been added: "abuse of crypto assets" and "providing unauthorized crypto asset exchange services."
Under the new law, anyone engaging in cryptocurrency trading on an unlicensed platform could face up to 2 years in prison. If the transaction amount exceeds 50 million Hungarian forints (approximately 140,000 USD), the sentence could be up to 3 years; if the transaction exceeds 500 million forints, the sentence will extend to 5 years.
Additionally, the law imposes the strictest penalties on service providers operating without government-approved licenses, with a maximum sentence of 8 years. This comprehensive reform has caught businesses and investors off guard.
According to local media Telex, around 500,000 Hungarians invest in crypto assets using legally declared income, but under the new regulatory framework, many of these users may face criminal charges due to past or ongoing crypto activities.
A source from Telex stated: "Ordinary users face the risk of prosecution just for managing their investments as usual."
"This law came into effect without any compliance guidelines published, and no one knows how to follow it."
It is worth noting that Hungary's financial regulatory authority (SZTFH) has 60 days to establish enforcement and compliance mechanisms, but the current legal environment remains unclear.
The new law also requires all crypto transactions—whether converting tokens to fiat or exchanging other tokens—to be reviewed and issued with compliance certification by authorized "validators." Transactions without this compliance certification will be deemed legally invalid, and participating in such transactions could trigger criminal penalties.
Although the law stipulates that transactions below certain thresholds can be exempted, no clear exemption standards have been established so far.
Revolut suspends crypto business in Hungary, new law casts compliance path into uncertainty.
The uncertainty of the law has led major market players to withdraw from Hungary. On July 9, the London-based neobank Revolut announced that it would suspend all cryptocurrency services "until further notice." Revolut has over 2 million users in Hungary.
Users can still transfer existing crypto assets to external wallets, but purchasing, charging, and staking services have been completely frozen. Revolut stated that the suspension of services is to ensure full compliance with Hungarian domestic laws and the EU's newly introduced crypto regulatory framework MiCA.
Revolut is currently applying for MiCA authorization through its EU entity, but the additional local license required by the Hungarian central bank complicates the process. As of July 7, Revolut has completely frozen crypto asset balances and even shut down its token sale feature.
Revolut emphasized that this measure is temporary and added, "We are working hard to restore services as soon as the regulatory path is clearer."
Hungary diverges from the EU's unified crypto regulatory approach.
The timing of Hungary's crackdown on crypto trading is particularly notable, as the EU's MiCA regulatory framework also took effect on July 1. MiCA aims to establish a unified legal framework for the crypto market across the EU, and several member states have chosen to delay implementation to ensure a smooth transition. However, Hungary is going against this coordinated path.
An analyst stated in an interview with Forbes: "It's hard to understand why Hungary would implement such strict regulations just as the EU establishes unified standards. This will create enormous legal uncertainty and stifle fintech innovation."
However, the crackdown on crypto trading seems to be just part of Hungary's broader policy trend. The government has also introduced regulations limiting foreign ownership of companies and enacted laws that allocate a portion of citizens' donation funds to the state.
Critics argue that these policies mainly affect urban voters with higher education levels, who typically do not support the ruling Fidesz party.
Although enforcement actions against global platforms like Coinbase or Binance are considered unlikely, businesses registered in Hungary and local users are now facing legal risks. This has led to a paradox—foreign platforms may continue to serve Hungarian clients with almost no consequences, while local companies may be prosecuted.
However, the Hungarian central bank announced on July 3 that it would exclude cryptocurrencies from official reserves, further exacerbating the restrictive atmosphere, citing the high volatility and unclear regulation of crypto assets.
The central bank stated: "The stability and reliability of reserve assets must be prioritized." It also reiterated its preference for traditional assets such as gold and fiat currency.
