Hungary

Retail_Trading_Status

Allowed-Regulated High Confidence

Analysis ID: #686
Version: Latest
Created: 2025-12-12 04:23
Run: da08b8ca...
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Workflow Stage: Step 1

Executive Summary

Retail cryptocurrency trading is legal in Hungary and is currently transitioning to a comprehensive regulatory framework aligned with the EU's Markets in Crypto-Assets Regulation (MiCA). The primary legislation, Act VII of 2024, designates the Magyar Nemzeti Bank (MNB) as the competent supervisory authority and establishes a licensing regime for Crypto-Asset Service Providers (CASPs). While a favorable 15% personal income tax rate applies to crypto gains, the regulatory environment is becoming increasingly strict, with new provisions effectively criminalizing unauthorized exchange activities and mandating rigorous transaction validation starting July 2025.

Detailed Explanation

Retail cryptocurrency trading is legal and regulated in Hungary, currently transitioning to a comprehensive regulatory framework aligned with the EU's Markets in Crypto-Assets Regulation (MiCA). The primary legislation, Act VII of 2024, enacted on April 10, 2024, designates the Magyar Nemzeti Bank (MNB) as the competent supervisory and licensing authority for Crypto-Asset Service Providers (CASPs). This act implements MiCA in Hungary and introduces a transition period until July 1, 2025, for existing service providers to obtain a license. The regulatory environment is underpinned by strict anti-money laundering (AML) and counter-financing of terrorism (CFT) obligations under Act LIII of 2017, which requires customer due diligence and suspicious transaction reporting for virtual currency exchange services and custodian wallet providers. Hungary's approach represents a 'gold-plating' of the EU MiCA regulation, adding stricter national requirements that create a highly regulated, legally secure but operationally demanding environment. A key national requirement mandates that crypto-asset exchanges must be validated by an authorized service provider to be considered lawful, effective July 2025. Furthermore, recent amendments to the Criminal Code criminalize unauthorized crypto exchange activities, with prison sentences possible for large volumes, also effective from July 2025. On taxation, the Act CXVII of 1995 on Personal Income Tax, as amended effective January 1, 2021, sets a favorable flat rate of 15% on income from transactions with crypto-assets and allows for tax equalization over a two-year period, with no social contribution tax required. The transition period allows companies registered as Virtual Asset Service Providers (VASPs) before December 30, 2024, to continue operating until July 1, 2025, while applying for a CASP license. This regulatory evolution has led to operational challenges, with some global fintechs temporarily suspending crypto services in Hungary to adjust to the new local requirements.

Summary Points

I. Regulatory Status
* Retail cryptocurrency trading is legal and regulated in Hungary.
* The regulatory framework is transitioning to align with the EU's Markets in Crypto-Assets Regulation (MiCA).
* The environment is becoming increasingly strict, with new provisions effectively criminalizing unauthorized exchange activities.

II. Key Regulatory Bodies
* Magyar Nemzeti Bank (MNB): The primary supervisory and licensing authority for Crypto-Asset Service Providers (CASPs), as designated by Act VII of 2024.

III. Important Legislation
* Act VII of 2024 on the Market of Crypto-Assets (Enacted: 2024-04-10)
* Implements the EU MiCA regulation in Hungary.
* Designates the MNB as the regulator and sets licensing requirements for CASPs.
* Introduces a transition period until July 1, 2025, for existing service providers.
* Act LIII of 2017 on the Prevention and Combating of Money Laundering (Enacted: 2017-06-26)
* Establishes AML/CFT obligations for financial service providers, including virtual currency exchange services and custodian wallet providers.
* Requires customer due diligence (CDD) and reporting of suspicious transactions.
* Act CXVII of 1995 on Personal Income Tax (Amendment) (Effective: 2021-01-01)
* Introduced a specific category for 'income from transaction with crypto-assets'.
* Sets a flat 15% tax rate and allows for tax equalization (loss deduction) over a 2-year period.

IV. Compliance Requirements
* Mandatory CASP licensing from the MNB, transitioning from previous AML-only VASP registration.
* Strict AML/KYC compliance under Act LIII of 2017 and recent amendments.
* Transaction validation requirements: Crypto-asset exchanges must be validated by authorized providers to be considered lawful (effective July 2025).
* Taxation: Crypto capital gains are subject to a 15% Personal Income Tax (PIT) rate.

V. Notable Restrictions or Limitations
* Strict Criminal Penalties: Recent amendments to the Criminal Code criminalize unauthorized crypto exchange activities, with prison sentences for large volumes, effective July 2025.
* Mandatory Validation: A unique national requirement that exchanges must be validated by an authorized service provider.
* Transition Period: Companies registered as VASPs before December 30, 2024, may continue operating until July 1, 2025, while applying for a CASP license.
* Operational Challenges: Some global fintechs (e.g., Revolut) have temporarily suspended crypto services in Hungary to adjust to the new, stricter local requirements.

VI. Recent Developments or Notes
* Hungary's approach represents a 'gold-plating' of the EU MiCA regulation, adding stricter national requirements (validation certificates, criminal liability) on top of the EU baseline.
* This creates a highly regulated environment that is legally secure but operationally demanding.

Full Analysis Report

Hungary has established a clear, albeit increasingly strict, regulatory environment for cryptocurrency. The country is currently in a transition phase, moving from a basic Anti-Money Laundering (AML) registration regime to a full licensing framework under Act VII of 2024, which implements the European Union's Markets in Crypto-Assets (MiCA) regulation. The Magyar Nemzeti Bank (MNB) serves as the primary regulator, overseeing the licensing and supervision of Crypto-Asset Service Providers (CASPs). Prior to this, Virtual Asset Service Providers (VASPs) were required to register with the tax authority (NAV) or financial intelligence unit solely for AML compliance purposes under Act LIII of 2017.

The most significant recent development is the enactment of Act VII of 2024, which entered into force on June 30, 2024. This law not only harmonizes Hungarian law with EU standards but also introduces specific national requirements that appear stricter than the EU baseline. Notably, the law mandates a 'compliance certificate' for crypto-to-fiat and crypto-to-crypto exchanges, issued by an authorized 'Validator'. Transactions lacking this certificate are legally invalid. Furthermore, amendments to the Hungarian Criminal Code have criminalized unauthorized crypto exchange activities, with penalties including imprisonment for high-value transactions conducted through unlicensed entities. These strict provisions are set to take full effect by July 1, 2025.

From a taxation perspective, Hungary is considered crypto-friendly. Since 2022, income from crypto-assets has been subject to a flat 15% Personal Income Tax (PIT). This regime allows individuals to offset losses against gains within the current and subsequent two tax years, significantly reducing the effective tax burden compared to the previous classification of crypto income as 'other income' which attracted higher social contributions.

The operational landscape is currently shifting. A 'grandfathering' clause allows VASPs registered before December 30, 2024, to continue operations until July 1, 2025, provided they apply for a full CASP license. However, the impending strict requirements have caused some market disruption; for instance, reports indicate that major fintech platforms like Revolut temporarily suspended crypto services for Hungarian clients to ensure compliance with the new local rules. This indicates that while retail trading is 'Allowed-Regulated', the barrier to entry for service providers is rising sharply.

Hungary has established a clear, albeit increasingly strict, regulatory environment for cryptocurrency. The country is currently in a transition phase, moving from a basic Anti-Money Laundering (AML) registration regime to a full licensing framework under Act VII of 2024, which implements the European Union's Markets in Crypto-Assets (MiCA) regulation. The Magyar Nemzeti Bank (MNB) serves as the primary regulator, overseeing the licensing and supervision of Crypto-Asset Service Providers (CASPs). Prior to this, Virtual Asset Service Providers (VASPs) were required to register with the tax authority (NAV) or financial intelligence unit solely for AML compliance purposes under Act LIII of 2017.

The most significant recent development is the enactment of Act VII of 2024, which entered into force on June 30, 2024. This law not only harmonizes Hungarian law with EU standards but also introduces specific national requirements that appear stricter than the EU baseline. Notably, the law mandates a 'compliance certificate' for crypto-to-fiat and crypto-to-crypto exchanges, issued by an authorized 'Validator'. Transactions lacking this certificate are legally invalid. Furthermore, amendments to the Hungarian Criminal Code have criminalized unauthorized crypto exchange activities, with penalties including imprisonment for high-value transactions conducted through unlicensed entities. These strict provisions are set to take full effect by July 1, 2025.

From a taxation perspective, Hungary is considered crypto-friendly. Since 2022, income from crypto-assets has been subject to a flat 15% Personal Income Tax (PIT). This regime allows individuals to offset losses against gains within the current and subsequent two tax years, significantly reducing the effective tax burden compared to the previous classification of crypto income as 'other income' which attracted higher social contributions.

The operational landscape is currently shifting. A 'grandfathering' clause allows VASPs registered before December 30, 2024, to continue operations until July 1, 2025, provided they apply for a full CASP license. However, the impending strict requirements have caused some market disruption; for instance, reports indicate that major fintech platforms like Revolut temporarily suspended crypto services for Hungarian clients to ensure compliance with the new local rules. This indicates that while retail trading is 'Allowed-Regulated', the barrier to entry for service providers is rising sharply.

Source Evidence

Primary and secondary sources cited in this analysis

Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing primary (law_text)

2017-06-26

"Service provider engaged in exchange services between virtual currencies and legal tenders... shall conduct customer due diligence."

EU financial regulators warn consumers on the risks of crypto-assets primary (regulator)

2022-03-17

"Providers of some types of crypto-asset services... are required to be authorised or registered for the purposes of anti-money laundering."

Information on the Prevention and Combating of Money Laundering primary (official_government)

2024-01-01

"Scope of this Act shall cover... service provider engaged in exchange services between virtual currencies and legal tenders."

Hungary: Significant changes to the Hungarian crypto market secondary (analysis)

2024-07-10

"According to the amended Crypto Act, crypto-assets may only be exchanged for funds or other crypto-assets based on a compliance certificate issued by a service provider authorized to validate crypto-asset exchange transactions."

1 July 2025: A key deadline for crypto asset service providers in Hungary secondary (analysis)

2024-04-07

"By the end of this transition period in Hungary, crypto asset service providers that were already operating prior to 30 December 2024 must fully comply with MiCA requirements."