Hungary’s New Cryptocurrency Laws Could Impact Domestic Market
Hungary’s newly updated laws on cryptocurrency trading could have a negative impact on the domestic crypto market, according to the Blockchain Hungary Association.
Implications of the Updated Laws
Kornél Kalocsai, the association’s president, expressed cautious optimism about the updated criminal code in a recent interview with Decrypt. The new regulations introduce penalties for the operation and use of unlicensed cryptocurrency exchanges.
Investors trading more than $1.45 million (or 500 million forints) could face up to five years in prison, while cryptocurrency service providers may be subjected to as many as eight years of incarceration.
Although the new code aims to crackdown on illegal operations, it has already led Revolut to halt crypto-trading services in Hungary.
Concerns and Uncertainty
Kalocsai emphasized that legally operating exchanges and platforms should not be affected by the new regulations. He pointed out that the law seeks to enhance legal certainty, transparency, and compliance with EU and domestic regulations.
However, the final text of the implementation decree is yet to be disclosed, raising concerns about potential strictness that could deter market participants and lead to a contraction in the crypto market.
Regulatory Clarity is Key
Despite the uncertainty, Kalocsai believes that clarifying the legal text and ensuring transparent communication are crucial to prevent market participants from leaving the country and instead encourage compliant operations.
He also highlighted the absence of guidelines from the Supervisory Authority for Regulated Activities on how to apply for licensing, which has added to the uncertainty among local firms.
Future Outlook
Kalocsai remains optimistic that investors will be able to use international exchanges complying with EU rules or register in Hungary once the licensing framework is established.
He emphasized that the new criminal law provisions do not prohibit the use or trading of cryptocurrencies but target unauthorized service providers. Additionally, the legal status of cryptocurrencies remains unchanged, with the law not applying to transfers below $14,250 or 5 million forints.
Conclusion
In conclusion, while Hungary’s updated criminal code may pose challenges for the crypto industry in the short term, Kalocsai believes that licensed exchanges in the EU will eventually be able to operate in Hungary once the MiCA Regulation comes into full effect by 2026.
Overall, regulatory clarity and transparent communication will be essential in navigating the evolving landscape of cryptocurrency trading in Hungary.