Up to eight years in prison—now the price of trading crypto on unlicensed exchanges in Hungary, where new laws have criminalized unauthorized activity and forced major fintechs to freeze services for millions
The new rules, which came into effect on July 1, sent shockwaves through the fintech sector, with industry players warning of a potential mass exodus and legal chaos for investors.
Hungary Criminalizes Unlicensed Crypto Use With Penalties Up to 8 Years
Hungary’s updated Criminal Code now defines two new offenses: “abuse of crypto assets” and “providing unauthorized crypto asset exchange services.”
Under the new law, anyone caught trading cryptocurrencies on unlicensed platforms could face up to two years in prison. The penalties increase with the size of the transaction, up to three years for trades exceeding HUF 50 million (about $140,000), and up to five years if the value is over HUF 500 million.
Also, the legislation warned service providers operating without government-approved licenses of the harshest penalties, including prison terms of up to eight years. The sweeping changes have caught both companies and investors off guard.
Local publication Telex reports that approximately 500,000 Hungarians have invested in crypto with legally declared income, but under the vague new framework, many of those users could now be criminalized for past or ongoing activity.
“There’s a real risk that regular users could be prosecuted simply for managing their investments the same way they always have,” said a Telex source.
“The law took effect before any compliance guidelines were published. No one knows how to follow it.”
Notably, the Hungarian Financial Supervisory Authority (SZTFH) has 60 days to establish enforcement and compliance mechanisms, but for now, the legal environment remains murky.
The legislation also requires all crypto transactions, whether converting tokens into fiat or other tokens, to be validated by an authorized “validator” issuing a compliance certificate. Transactions without this certificate are considered legally void, and engaging in such activity can trigger criminal penalties.
Although the law provides room for exemptions below a certain threshold, no such exceptions have yet been formalized.
Revolut Freezes Crypto in Hungary as New Law Clouds Compliance Path
This uncertainty has already led to a major player pulling out of the Hungarian market. On July 9, Revolut, the London-based neobank with more than two million Hungarian users, announced a suspension of all cryptocurrency services “until further notice.”
While users can still transfer existing holdings to external wallets, purchases, deposits, and staking services have been currently frozen.
The company stated the pause was necessary to ensure full compliance with domestic law and the European Union’s new crypto regulatory framework, MiCA.
Revolut is currently pursuing MiCA authorization through its EU entity, but Hungary’s additional licensing requirement from the National Bank complicates matters. As of July 7, the company also froze crypto balances entirely, disabling even token sales.
“This move is temporary,” Revolut emphasized, adding that it is “working hard to resume services once the regulatory path becomes clearer.”
Hungary Goes Rogue on Crypto Policy as EU Pushes Unified Regulation
The timing of Hungary’s crackdown is particularly notable given that the EU’s Markets in Crypto Assets (MiCA) regulation also came into effect on July 1.
MiCA is intended to create a unified legal framework for crypto across the EU, and several member states have delayed implementation to allow smoother transitions.
Hungary, however, has diverged sharply from this coordinated approach. “It’s incomprehensible why Hungary would implement such restrictive rules just as the EU is establishing unified standards,” said one analyst in a Forbes report.
“This creates enormous legal uncertainty and discourages fintech innovation.”
However, the crackdown appears part of a broader trend in Hungarian policymaking, with the government also enacting restrictions on foreign corporate ownership and introducing laws that funnel certain citizen donations to the state.
Critics argue these moves disproportionately affect urban, educated voters less likely to support the ruling Fidesz party.
While enforcement against global exchanges such as Coinbase or Binance is considered unlikely, Hungarian-registered firms and domestic users are now operating under legal risk.
This creates a paradox in which foreign platforms may continue serving Hungarian clients with little consequence, while local companies face possible prosecution.
Adding to the restrictive climate, the Hungarian Central Bank on July 3 announced it will exclude cryptocurrencies from its official reserves, citing volatility and a lack of regulatory clarity.
“We must prioritize stability and reliability in our reserve holdings,” the bank stated, reaffirming its preference for traditional assets like gold and fiat currencies.
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