According to the Blockchain Hungarian Association, newly updated laws regarding Hungary’s cryptocurrency trading could have a negative impact on the domestic crypto market.
Kornél Kalocsai, president of the association, was very welcomed the updated criminal law while speaking. Decryption. The new regulations impose penalties on the operation and use of unauthorized cryptocurrency exchanges.
These could face up to five years in prison for investors trading over $1.45 million (or 500 million forints), with cryptocurrency service providers posing as much as eight years in prison.
With this update, Revolut has already urged it to stop offering crypto trading services in Hungary, but Kalocsai claims that the new code itself has not “pushed out” the platforms that are legally operated and instead targets illegal and unauthorized operations.
“The law aims to strengthen legal certainty, increase transparency and support support providers complying with EU and national regulations.
However, Kolocsai acknowledges that the code has been adopted so far only at statutory levels, and that the final text of its implementation order has not been shared.
Therefore, it may be tougher than expected. This could have unfortunate consequences for the Hungarian cryptocurrency market.
“If the law turns out to be overly strict or inconsistent, it can discourage domestic players and lead to short-term contractions in the market,” he said. “Therefore, ensuring transparent communication is essential to clarify legal texts, prevent market participants from leaving the country and encourage them to pursue compliant operations instead.”
The supervisory authority on regulated activities has not yet published guidelines on how to apply for a license. It could have possibly spiked uncertainty among local businesses.
Despite the uncertainty, Kaloksai argues he is against the strong claim that the updated criminal law will have a calm impact on Hungary’s crypto industry.
“The goal of the revision is to move actors away from underground or unregulated businesses towards regulated markets,” he explained. “The new criminal code provisions do not prohibit the use or transaction of cryptocurrency, but cover fraudulent provisions of services.”
The updated code does not change the legal status of the cryptocurrency. It also does not apply to transfers under $14,250 or 5 million forints.
“The law specifically covers service activities,” Kaloksai added, “for example, people who regularly promote crypto exchange services to others in exchange for fees and fees.”
Depending on the exact scope of the implementation order, some complications may be generated for entities operating on a peer-to-peer basis, as they must either reorganize into a formal business structure or find alternative legal setups.
Going forward, Kaloksai expects investors to be able to use international exchanges complying with EU MICA regulations or register in Hungary as soon as the licensing framework is shared.
“The main risk at this stage is the lack of clear communication regarding who is eligible as a service provider and how important terms such as ‘business activity’ and ‘currency exchange’ are actually interpreted.
Ultimately, Kalocsai repeats that once MICA regulations are fully effective, crypto exchanges already licensed in the EU can also operate in Hungary.
“For example, an exchange approved in France or Germany may operate in Hungary if it complies with local registration or notification obligations,” he explains.
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