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Hungary

Retail_Trading_Status

Allowed-Regulated Unknown
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Analysis ID
#250
Version
Archived
Created
2025-06-26 09:09
Workflow Stage
Initial Research

Executive Summary

In Hungary, individual citizens and residents are legally permitted to buy, sell, and hold cryptocurrencies. The regulatory environment is evolving towards a comprehensive framework driven by the EU's MiCA regulation, with the Hungarian National Bank (MNB) as the competent supervisory authority. CASPs are subject to licensing requirements, with a grandfathering period until July 1, 2025, for those operating before December 30, 2024. Hungary has also implemented AMLD5 and the Hungarian AML Act, mandating KYC/AML procedures for CASPs.

Key Pillars

The key regulatory pillars include: The Hungarian National Bank (MNB) as the primary regulator; compliance with AML/KYC procedures as mandated by AMLD5 and the Hungarian AML Act; and licensing requirements for Crypto-Asset Service Providers (CASPs) operating under the EU's MiCA regulation. Registration with the financial intelligence unit of the National Tax and Customs Administration (NAV) is required for CASPs. The Hungarian AML Act will apply to all types of crypto-asset providers as defined by MiCAR from January 1, 2025, with some exceptions.

Landmark Laws

  • Personal Income Tax (PIT) Act Amendment (2022): Classified income from cryptocurrency transactions as a separate taxable income, reducing the tax burden to a flat 15% on realized gains.
  • Act VII of 2024 on the market in crypto-assets: Adopted to align national law with the EU's MiCA regulation, effective June 30, 2024. It designates the Hungarian National Bank (MNB) as the competent supervisory authority responsible for overseeing crypto-asset service providers (CASPs) and ensuring compliance with MiCAR.
  • Act LIII of 2017 (Hungarian AML Act): Mandates KYC/AML procedures for CASPs, particularly providers of exchange services between virtual currencies and fiat currencies and custodian wallet providers. From January 1, 2025, it will apply to all types of crypto-asset providers as defined by MiCAR, with some exceptions.

Considerations

  • Cryptocurrency income is classified as a separate taxable income, subject to a flat 15% tax on realized gains. Losses can be carried forward to offset future gains. Mining income is also subject to this tax rate for individuals, with deductible expenses.
  • Some Hungarian banks have been cautious regarding crypto activities, and the relationship between traditional banking and crypto is still developing.
  • Consumer protection and financial stability are key concerns driving the regulatory framework.

Notes

  • Before 2022, there was no specific regulation of crypto assets in Hungary.
  • A transitional "grandfathering" period exists until July 1, 2025, for CASPs that were already operating before December 30, 2024, to comply with MiCA requirements and obtain the necessary licenses from the MNB.
  • After July 1, 2025, operating as a CASP without a MiCA license will be illegal.
  • The provided URLs may require navigation on the linked sites to access the specific version updated May 29, 2024, for the CMS Expert Guide.

Detailed Explanation

Individual citizens and residents in Hungary are legally permitted to buy, sell, and hold cryptocurrencies. The regulatory environment in Hungary has been evolving from a period of limited specific regulation to a more comprehensive framework, largely driven by the European Union's Markets in Crypto-Assets Regulation (MiCA). Historically, Hungary did not have specific laws for cryptocurrencies, and they were generally treated under existing financial and tax regulations. The Hungarian National Bank (MNB) issued warnings regarding the risks associated with cryptocurrencies, including volatility and the potential for scams. However, an outright ban was not pursued. Before 2022, there was no specific regulation of crypto assets in Hungary.

A significant development was the amendment of the Personal Income Tax (PIT) Act in 2022, which classified income from cryptocurrency transactions as a separate taxable income, reducing the tax burden from a potential 26.5% (as "other income") to a flat 15% on realized gains. This change aimed to encourage compliance and bring more clarity to the taxation of crypto-assets for individuals. Losses can also be carried forward to offset future gains. Mining income is also subject to this 15% tax rate for individuals, with deductible expenses. The PwC Tax Summaries report last reviewed Feb 4, 2025, confirms these details.

The most substantial regulatory shift is the implementation of the EU's MiCA regulation. Hungary adopted Act VII of 2024 on the market in crypto-assets to align national law with MiCA, which came into effect on June 30, 2024. This act designates the Hungarian National Bank (MNB) as the competent supervisory authority responsible for overseeing crypto-asset service providers (CASPs) and ensuring compliance with MiCAR, according to Nagy & Trócsányi on April 12, 2024. Under this new framework, CASPs are subject to licensing requirements. There is a transitional "grandfathering" period until July 1, 2025, for CASPs that were already operating before December 30, 2024, to fully comply with MiCA requirements and obtain the necessary licenses from the MNB, as noted by Taylor Wessing on April 29, 2025. After this date, operating without a MiCA license will be illegal.

Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations are a key component of the regulatory environment. Hungary implemented the EU's AMLD5, which mandates KYC/AML procedures for CASPs. This includes verifying customer identities for transactions over certain thresholds and reporting suspicious activities. Specifically, providers of exchange services between virtual currencies and fiat currencies, and custodian wallet providers, fall under the scope of the Hungarian AML Act (Act LIII of 2017). From January 1, 2025, the Hungarian AML Act will apply to all types of crypto-asset providers as defined by MiCAR, with some exceptions like crypto-asset advice services. CASPs must register with the financial intelligence unit of the National Tax and Customs Administration (NAV). While the regulatory framework is becoming more defined, some Hungarian banks have been cautious, and the relationship between traditional banking and crypto activities is still developing. However, the overall direction is towards a regulated environment that allows for innovation while ensuring consumer protection and financial stability.

Summary Points

Retail Trading of Cryptocurrencies in Hungary: Regulatory Status (June 2025)

Overall Status: Allowed-Regulated

1. Regulatory Bodies and Roles:

  • Hungarian National Bank (MNB):
    • Designated as the competent supervisory authority for crypto-asset service providers (CASPs).
    • Responsible for overseeing CASPs and ensuring compliance with MiCA.
    • Issues licenses to CASPs.
  • National Tax and Customs Administration (NAV):
    • Financial intelligence unit.
    • CASPs must register with NAV for AML/CTF purposes.

2. Key Legislation and Regulations:

  • EU's Markets in Crypto-Assets Regulation (MiCA):
    • The primary driver of the current regulatory framework.
    • Aims to create a harmonized regulatory framework for crypto-assets across the EU.
  • Act VII of 2024 on the market in crypto-assets:
    • Hungarian law aligning national law with MiCA.
    • Came into effect on June 30, 2024.
  • Personal Income Tax (PIT) Act (amended in 2022):
    • Classifies income from cryptocurrency transactions as a separate taxable income.
    • Sets a flat 15% tax rate on realized gains.
    • Allows for carrying forward losses to offset future gains.
    • Applies the 15% tax rate to mining income, with deductible expenses.
  • Hungarian AML Act (Act LIII of 2017):
    • Implements the EU's AMLD5.
    • Mandates KYC/AML procedures for CASPs.
    • Requires verifying customer identities for transactions over certain thresholds.
    • Requires reporting suspicious activities.
    • From January 1, 2025, applies to all types of crypto-asset providers as defined by MiCAR (with some exceptions like crypto-asset advice services).

3. Requirements for Compliance:

  • Licensing for CASPs:
    • CASPs must obtain a MiCA license from the MNB to operate legally.
    • A transitional "grandfathering" period exists until July 1, 2025, for CASPs operating before December 30, 2024, to comply with MiCA and obtain licenses.
    • Operating without a MiCA license after July 1, 2025, is illegal.
  • KYC/AML Compliance:
    • CASPs must implement KYC/AML procedures as mandated by the Hungarian AML Act.
    • Verify customer identities for transactions over certain thresholds (e.g., €1,000).
    • Report suspicious activities to the NAV.
  • Registration with NAV:
    • CASPs must register with the financial intelligence unit of the NAV.

4. Notable Restrictions or Limitations:

  • Cautious Banking Relationships:
    • Some Hungarian banks have been cautious about engaging with crypto activities.
    • The relationship between traditional banking and crypto is still developing.

5. Recent Developments or Changes:

  • Implementation of MiCA (Act VII of 2024):
    • Significant shift towards a more comprehensive regulatory framework.
    • Designation of the MNB as the competent supervisory authority.
  • Taxation of Cryptocurrency Gains:
    • Amendment of the PIT Act in 2022, reducing the tax burden on cryptocurrency gains to 15%.
  • AML Act Expansion:
    • From January 1, 2025, the Hungarian AML Act applies to all types of crypto-asset providers as defined by MiCAR.

6. Taxation:

  • Flat 15% tax applies to all cryptocurrency gains for individuals.
  • No long-term holding exemptions.
  • Losses can be carried forward to offset future gains.
  • Mining income is also subject to this 15% tax rate for individuals, with deductible expenses.

Full Analysis Report

Retail_Trading_Status in Hungary

Report Date: 2025-06-26

Topic: Retail_Trading_Status

Description: Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

1. Identified Current Status

Allowed-Regulated

2. Detailed Narrative Explanation

Individual citizens and residents in Hungary are legally permitted to buy, sell, and hold cryptocurrencies. The regulatory environment has been evolving significantly, moving from a period of limited specific regulation to a more comprehensive framework largely driven by the European Union's Markets in Crypto-Assets Regulation (MiCA).

Historically, Hungary did not have specific laws for cryptocurrencies, and they were generally treated under existing financial and tax regulations. The Hungarian National Bank (MNB) issued warnings regarding the risks associated with cryptocurrencies, including volatility and the potential for scams. However, an outright ban was not pursued.

A significant development was the amendment of the Personal Income Tax (PIT) Act in 2022, which classified income from cryptocurrency transactions as a separate taxable income, reducing the tax burden from a potential 26.5% (as "other income") to a flat 15% on realized gains. This change aimed to encourage compliance and bring more clarity to the taxation of crypto-assets for individuals. Losses can also be carried forward to offset future gains. Mining income is also subject to this 15% tax rate for individuals, with deductible expenses.

The most substantial regulatory shift is the implementation of the EU's MiCA regulation. Hungary adopted Act VII of 2024 on the market in crypto-assets to align national law with MiCA, which came into effect on June 30, 2024. This act designates the Hungarian National Bank (MNB) as the competent supervisory authority responsible for overseeing crypto-asset service providers (CASPs) and ensuring compliance with MiCAR.

Under this new framework, CASPs are subject to licensing requirements. There is a transitional "grandfathering" period until July 1, 2025, for CASPs that were already operating before December 30, 2024, to fully comply with MiCA requirements and obtain the necessary licenses from the MNB. After this date, operating without a MiCA license will be illegal.

Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations are a key component of the regulatory environment. Hungary implemented the EU's AMLD5, which mandates KYC/AML procedures for CASPs. This includes verifying customer identities for transactions over certain thresholds and reporting suspicious activities. Specifically, providers of exchange services between virtual currencies and fiat currencies, and custodian wallet providers, fall under the scope of the Hungarian AML Act (Act LIII of 2017). From January 1, 2025, the Hungarian AML Act will apply to all types of crypto-asset providers as defined by MiCAR, with some exceptions like crypto-asset advice services. CASPs must register with the financial intelligence unit of the National Tax and Customs Administration (NAV).

While the regulatory framework is becoming more defined, some Hungarian banks have been cautious, and the relationship between traditional banking and crypto activities is still developing. However, the overall direction is towards a regulated environment that allows for innovation while ensuring consumer protection and financial stability.

3. Specific, Relevant Text Excerpts

  • CMS Expert Guide to Crypto Regulation in Hungary (Updated May 29, 2024): "From 30 June 2024: The Hungarian legislature has passed Act VII of 2024 on the market in crypto-assets, designating the Central Bank of Hungary (CBH) as the competent authority responsible for ensuring the compliance of crypto-asset service providers with MiCAR."
  • CMS Expert Guide to Crypto Regulation in Hungary (Updated May 29, 2024): "Until 31 December 2024: Partially, yes, the following fall under the scope of the Hungarian AML Regulation: Providers of exchange services between virtual currencies and fiat currencies, and between different types of virtual currencies; and; custodian wallet providers."
  • CMS Expert Guide to Crypto Regulation in Hungary (Updated May 29, 2024): "From 1 January 2025: Because of the MiCAR, the Hungarian AML Act shall apply to all types of crypto-asset providers according to article 3 (1)/15 of the MiCAR, if the provider provides one or more crypto-asset services under article 3 (1) / 16 of the MiCAR."
  • Coinfomania (June 19, 2025): "(2025-06-19) Act VII of 2023 Mandates licensing for exchanges, wallets, and custodians under the Hungarian National Bank (MNB). AML/KYC Rules: CASPs must verify identities for transactions over €1,000. MiCA Compliance: Full alignment by 2025, including consumer protection and transparency rules."
  • Coinfomania (June 19, 2025): "(2025-06-19) 15% flat tax applies to all cryptocurrency gains for individuals with no long-term holding exemptions."
  • Taylor Wessing (April 29, 2025): "The grandfathering period in Hungary runs until 1 July 2025. After that date, all CASPs providing services in Hungary will need to obtain a MiCA license to continue operations."
  • Wolf Theiss (April 7, 2025): "In Hungary, Act VII of 2024 on the crypto asset market was adopted to implement these regulations [MiCA] and came into effect on 30 June 2024. The practical application of the new regulation is happening gradually, with the next key deadline for market players to mark on their calendars being 1 July 2025."
  • BékésPartners (Undated, context suggests recent): "Before 2022, there was no specific regulation of crypto assets in Hungary... This has been changed by the Personal Income Tax (hereinafter referred to as the “PIT Act”) amendment of 2022, which has classified cryptocurrency income as a separate taxable income instead of “other income”, thus reducing the effective tax burden from 26.5% to 15%."
  • Scorechain (Content likely updated for 2025): "Cryptocurrency is fully legal in Hungary, and residents can buy, sell, and hold virtual assets. The country's regulatory framework ensures secure and transparent operations within the crypto industry."
  • Kulfiy.com (April 18, 2025): "The Hungarian government has not banned crypto. In fact, the stance has gradually evolved from skepticism to cautious openness."
  • Nagy & Trócsányi (April 12, 2024, regarding Act VII of 2024): "The new law designates the National Bank of Hungary (Magyar Nemzeti Bank; "MNB"), the central bank and financial supervisory authority of Hungary, as the competent authority for overseeing the crypto-asset market and enforcing the rules and sanctions established by the European regulation and the new law."

4. Direct, Accessible URL Links

Web Sources (13)

Sources discovered via web search grounding

Search queries used (7)
  • retail cryptocurrency trading regulations Hungary 2025
  • Hungary cryptocurrency laws 2025
  • Hungarian National Bank cryptocurrency stance 2025
  • KYC/AML cryptocurrency Hungary 2025
  • Are individuals in Hungary allowed to buy and sell cryptocurrencies legally?
  • Taxation of cryptocurrency in Hungary for retail investors 2025
  • Recent cryptocurrency regulation updates Hungary
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