Hungary's New Crypto Law Imposes Up To 8-Year Penalties, Disrupts Local Market

Hungary has enacted a rigorous new law targeting cryptocurrency trading, causing significant disruption within the local crypto community. The legislation, which took effect on July 1, 2025, imposes severe penalties for both traders and service providers involved in unauthorized crypto activities. Individuals engaging in basic crypto transactions now face up to two years in prison, while those involved in larger transactions could face up to five years behind bars. The law also targets service providers, imposing penalties of up to eight years for those processing significant volumes of crypto without proper validation.

The new law mandates that all crypto exchanges must undergo a state-controlled validation process. This process includes strict checks on the origin of funds, wallet ownership, identity verification, and profiling. Without this official validation, any conversion of crypto into fiat or other assets is deemed illegal. This has left many traders and service providers in a state of uncertainty, as they must either halt operations, relocate, or risk prosecution. The government has given regulatory authorities a 60-day timeline to define the specifics of the new regulations, but there is still no public guidance or compliance playbook available.

The impact of this legislation is already being felt, with some service providers suspending their operations in Hungary. Revolut, one of the most popular service providers in the region, has suspended all crypto services in response to the new law. Other firms are reportedly exploring relocations to more crypto-friendly EU countries. Local estimates suggest that around 500,000 individuals are engaged in crypto operations and will be affected by the new legislation.

The new law has been criticized by industry figures, who describe it as damaging to the local crypto scene. The lack of clear guidelines and the severity of the penalties have created an atmosphere of uncertainty, with many service providers considering exiting the market. The broader impact on global service providers, which operate in Hungary, remains unclear. These firms have not yet announced any adjustments to their services based on the new rules, and broader reports suggest that direct impact on them is unlikely. However, the situation is fluid, and further developments are expected as the regulatory landscape evolves.