Hungary Cracks Down Hard: New Crypto Law Threatens Prison for Unlicensed Trading
Budapest just turned crypto regulation into a high-stakes game. Hungary's new legislation slams unauthorized digital asset trading with prison time—no warnings, no fines. Straight to jail.
The Iron Fist Approach
While other EU nations debate MiCA guidelines, Hungary bypasses bureaucracy with brute force. The law targets unlicensed P2P platforms and OTC desks, treating them like financial terrorists. One government official called it 'preemptive strike against crypto anarchy.'
Market Chills
Local traders report frozen withdrawals on three Hungarian exchanges since the announcement. Bitcoin premiums on HuH (Hungary's gray-market hub) spiked 18% overnight—because nothing says 'financial innovation' like creating a prison-backed stablecoin.
The Global Ripple
This moves makes El Salvador's Bitcoin bonds look like a beach vacation. Meanwhile, Chainalysis data shows Eastern European crypto flows rerouting through Romania...for now.
Hungary's playing regulatory hardball while traditional banks still launder billions annually. Priorities, right?
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.
