Original text by: Hassan Shittu, cryptonews

Translated by: Yuliya, PANews

Hungary has suddenly shifted to criminalizing unauthorized cryptocurrency activities, becoming one of the most aggressive countries in the EU, turning everyday cryptocurrency transactions into potential legal minefields. According to the latest legal provisions, engaging in cryptocurrency transactions on unauthorized trading platforms can lead to a maximum of 5 years in prison, while platforms providing services without a license can face up to 8 years in prison. This new regulation has forced several major fintech companies to suspend services, affecting millions of users.

This new regulation took effect on July 1, causing a stir in the fintech industry. Industry insiders warn that it could lead to large-scale capital withdrawals, leaving investors in a state of legal chaos.

Criminalization of unauthorized cryptocurrency trading, with a maximum sentence of 8 years.

According to Hungary's latest revised (criminal code), two new offenses have been added: "abuse of crypto assets" and "providing unauthorized cryptocurrency exchange services."

Under the new law, anyone engaging in cryptocurrency transactions on unauthorized platforms can face up to 2 years in prison. If the transaction amount exceeds 50 million Hungarian forints (approximately $140,000), the prison term can be up to 3 years; if the transaction amount exceeds 500 million forints, the term can extend to 5 years.

Moreover, the law imposes the strictest penalties on service providers operating without government-approved licenses, with a maximum of 8 years in prison. This comprehensive reform has caught businesses and investors off guard.

According to local media Telex, about 500,000 Hungarians invest in crypto assets using legally declared income, but under the new vague framework, many of these users may face criminal charges due to past or ongoing cryptocurrency activities.

A source from Telex stated: "Ordinary users face the risk of being prosecuted simply for managing their investments as usual."

This law was implemented without any compliance guidelines being released, and no one knows how to follow it.

It is worth noting that the Hungarian Financial Supervisory Authority (SZTFH) has 60 days to develop enforcement and compliance mechanisms, but the current legal environment remains unclear.

The new law also requires all cryptocurrency transactions—whether exchanging tokens for fiat or exchanging tokens for other tokens—to be reviewed by authorized "verifiers" and to issue compliance certificates. Transactions without this compliance certificate will be considered legally invalid, and participating in such transactions may trigger criminal penalties.

Although the law stipulates that transactions below certain thresholds may be exempt, no clear exemption standards have yet been established.

Revolut suspends its cryptocurrency business in Hungary, compliance path shrouded in fog.

The uncertainty of the law has already led major market players to withdraw from Hungary. On July 9, London-based neobank Revolut announced 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, depositing, and staking services have been fully suspended. Revolut stated that the suspension was to ensure full compliance with Hungarian domestic laws and the newly launched EU cryptocurrency regulatory framework MiCA.

Revolut is currently applying for MiCA authorization through its EU entity, but the additional local licensing requirements imposed by the Hungarian central bank complicate the process. As of July 7, Revolut has completely frozen cryptocurrency asset balances and even disabled token sale functions.

Revolut emphasized that this measure is temporary, adding that it is "working to restore services as quickly as possible once the regulatory path becomes clearer."

Hungary deviates from the EU's unified cryptocurrency regulatory path.

The timing of Hungary's crackdown on cryptocurrency trading is particularly special, as the EU's MiCA regulatory framework also came into effect on July 1. MiCA aims to establish a unified legal framework for the cryptocurrency market across the EU, with several member states opting to delay implementation to ensure a smooth transition. However, Hungary has gone against this coordinated path.

An analyst said in an interview with (Forbes): "It is difficult to understand why Hungary is implementing such strict regulations just as the EU has established unified standards. This will create significant legal uncertainty and hinder fintech innovation."

Nevertheless, the crackdown on cryptocurrency trading seems to be part of Hungary's broader policy trend. The government has also introduced regulations limiting foreign ownership of companies and enacted laws to allocate part of citizens' donated funds to the state.

Critics argue that these policies mainly affect higher-educated voters in urban areas, who typically do not support the ruling Fidesz party.

Although enforcement actions against global trading platforms like Coinbase or Binance are considered unlikely, businesses registered in Hungary and local users now face legal risks. This has led to a paradox—foreign platforms may continue to provide services to Hungarian customers with little consequence, 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 of crypto assets and unclear regulations.

The central bank stated, "The stability and reliability of reserve assets must be prioritized," while reiterating its preference for traditional assets such as gold and fiat currency.

(The above content is excerpted and reprinted with permission from partner PANews, original link)

"Unauthorized trading of cryptocurrencies criminalized! Under Hungary's new regulations, a maximum of 5 years imprisonment, investors caught in legal fog" was originally published on (Blockcast).