Hungary has introduced new, stricter rules governing cryptocurrency. The revised legislation carries significant legal penalties for anyone unlawfully trading digital assets or running crypto exchange platforms without proper authorization and licensing.
These penalties include possible jail time, with individuals facing up to five years and service providers up to eight years. Questions remain, however, regarding how this will work in reality, as the detailed rules for following the law have not yet been made public.
Hungary Takes Strong Action Against Unlicensed Crypto Trading
The law, which went into effect on July 1st, was added as changes to Hungary’s criminal laws. According to the new regulations, individuals conducting transactions on unapproved systems could be imprisoned for a maximum of two years if the value of the trades is less than 50 million Hungarian forints (roughly $146,000).
The severity of the punishment increases depending on the trade’s value. If the value of the transactions is between 50 million and 500 million forints (approximately $1.46 million), the individual could face a prison sentence of up to three years.
Moreover, trades valued at over 500 million forints can result in a five-year prison term. Illegal exchange operators may be sentenced to up to eight years in prison, depending on the size and scope of their unauthorized activities.
“An individual participating in crypto-asset exchange services for considerable sums without meeting the validation requirements outlined in the cryptoassets market law commits a felony. This offense is punishable by up to three years imprisonment. (2) The sentence increases to one to five years for committing a felony… related to a particularly large value. (3) A felony involving… a particularly significant value carries a sentence of two to eight years,” the legislation states.
The strictness of these penalties has raised some eyebrows. Telex, a local news source, suggests that the law could potentially affect around 500,000 Hungarians who have legally acquired crypto assets.
Many cryptocurrency-related businesses in Hungary are also unclear on how the law will be implemented and worry about possible criminal charges. The Hungarian Financial Supervisory Authority (SZTFH) has a 60-day window to develop the rules for adhering to the new law. However, until these rules are defined, uncertainty is expected to continue.
The market reaction has been swift. Revolut, a well-known financial technology company, has temporarily stopped offering cryptocurrency services to its Hungarian clients following the law’s implementation.
“Due to recent changes in Hungarian regulations, we have regretfully decided to put all cryptocurrency services for our customers in Hungary on hold,” according to the company statement.
Portfolio reported on Monday that Revolut has since reinstated crypto withdrawal capabilities. However, the complete return of all services remains uncertain pending the resolution of regulatory ambiguities.
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