Hungary's sudden shift towards criminalizing unauthorized cryptocurrency activities has made it one of the most aggressive countries in the EU, turning everyday cryptocurrency trading into a potential legal minefield. Under the latest legal provisions, trading cryptocurrencies on unauthorized platforms can lead to up to 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 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 large-scale capital withdrawals, leaving investors in a state of legal confusion.
Unauthorized cryptocurrency trading criminalized, with a maximum sentence of up to 8 years
Under Hungary's recently amended (Penal Code), two new offenses have been added: 'misuse of crypto assets' and 'providing unauthorized cryptocurrency exchange services.'
According to the new law, anyone engaging in cryptocurrency trading on unauthorized platforms can face up to 2 years in prison. If the transaction amount exceeds 50 million Hungarian forints (approximately $140,000), the sentence can go up to 3 years; if the transaction amount exceeds 500 million forints, the sentence can be extended to 5 years.
Moreover, the law imposes the harshest penalties on service providers operating without government-approved licenses, with a maximum sentence 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 vague framework of the new regulations, many of these users may face criminal charges due to past or ongoing cryptocurrency activities.
A source from Telex stated: 'Ordinary users risk prosecution simply for managing their investments as usual.'
This law started to be enforced without any compliance guidelines being published, leaving everyone unsure of how to comply.
It is noteworthy that Hungary's Financial Supervisory Authority (SZTFH) has 60 days to establish enforcement and compliance mechanisms, but the current legal environment remains unclear.
The new law also requires all cryptocurrency transactions—whether converting tokens to fiat currency or exchanging other tokens—to be audited by authorized "verifiers" and issue compliance certificates. Transactions without this compliance certificate will be deemed legally invalid, and participating in such transactions may trigger criminal penalties.
Although the law states that transactions below certain thresholds may be exempt, no clear exemption criteria have been published yet.
Revolut suspends its cryptocurrency business in Hungary, leaving the compliance path shrouded in fog
The uncertainty of the law has already led major market participants to withdraw from Hungary. On July 9, London-based neobank Revolut announced it was suspending 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 the purchase, storage, and staking services have been completely frozen. Revolut stated that the suspension of operations is to ensure full compliance with Hungarian domestic laws and the EU's newly introduced cryptocurrency regulatory framework, MiCA.
Revolut is currently applying for MiCA authorization through its EU entity, but the additional local permits required by Hungary’s central bank complicate the process. As of July 7, Revolut has also completely frozen cryptocurrency asset balances and even disabled token sale functionality.
Revolut emphasized that this measure is temporary and added that 'we are working to restore services as soon as the regulatory path is clearer.'
Hungary deviates from the unified EU cryptocurrency regulatory path
Hungary's crackdown on cryptocurrency trading comes at a particularly unique time, 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, with several member states choosing to delay implementation to ensure a smooth transition. However, Hungary has diverged from this coordinated path.
An analyst stated in an interview with (Forbes): 'It is difficult to understand why Hungary would implement such strict regulations just as the EU has established unified standards. This will create enormous legal uncertainty and hinder fintech innovation.'
However, the crackdown on cryptocurrency trading seems to be just part of Hungary's broader policy trend. The government has also introduced regulations restricting foreign ownership in businesses and enacted laws diverting funds donated by some citizens to the state.
Critics argue that these policies mainly affect the more 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 created a paradox—foreign platforms may continue to serve 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 environment, citing the volatility of crypto assets and unclear regulations.
The central bank stated that "the stability and reliability of reserve assets must be prioritized," while reiterating a preference for traditional assets such as gold and fiat currencies.
This article is reprinted with permission from: (PANews)
Original article by: Hassan Shittu, Cryptonews
Translation by: Yuliya, PANews
Original title: Hungary Threatens 8 Years in Prison for Unauthorized Crypto Trading
‘Hungary's new regulations are extremely strict! Buying coins on unauthorized exchanges could lead to up to 5 years in prison, and Revolut has suspended operations’ was first published in ‘Crypto City’