Hungary U-Turns on Crypto Crackdown: Jail Time for Trading Now Off the Table 🗞️

Hungary is preparing to dismantle crypto-trading restrictions that carried potential prison sentences, reversing a framework adopted last year and prompted in part by an European Union compatibility review, a government spokesperson said Thursday. Speaking at a press conference, Tisza government spokesperson Anita Köböl said the rules requiring approved validation for crypto conversions would be scrapped, along with the criminal penalties attached to violations. "This was an unnecessary piece of legislation. It made practical operation impossible and frightened the market participants," Köböl said, according to a Cointelegraph translation. "The criminal consequences also negatively impacted several hundred thousand people." She added that the restrictions had contributed to a decline in crypto trading activity in the country.

The reversal targets amendments to Hungary's Criminal Code and its Act VII of 2024 on the crypto market, known as the Crypto Act, that took effect on July 1, 2025. Under those rules, exchanging crypto could only be carried out with a compliance certificate issued by an authorized crypto asset conversion validation service provider, a new entity type overseen by Hungary's Supervisory Authority of Regulated Activities. Transactions lacking that certificate were treated as "unauthorised crypto-transactions," with linked asset transfers deemed invalid and unable to produce legal effect. Providers were tasked with checking asset origins, identifying wallet or device ownership, assessing user profiles and verifying transactions against external databases before issuing certificates.

Penalties scaled sharply with transaction size. Individuals or entities exchanging crypto worth between 5 million Hungarian forint and 50 million forint, roughly $16,000 to $160,000, through an unauthorized service could face up to two years in prison. Penalties increased to five years for transactions between 50 million forint and 500 million forint and up to eight years for transactions above 500 million forint. Köböl said several digital asset platforms, including Revolut, suspended crypto services in Hungary following the rules, and that the European Commission had opened a probe examining whether the restrictions were compatible with bloc-level rules.