Hungary Imposes Up To 8-Year Prison Sentences For Unauthorized Crypto Trading

Hungary has implemented stringent cryptocurrency legislation, effective from July 1, which imposes prison sentences of up to eight years for individuals and service providers operating unauthorized digital asset exchanges. This move marks one of the most rigorous regulatory approaches to cryptocurrency enforcement in Europe.

The new Criminal Code amendments establish a tiered penalty system based on transaction values. Individual traders using unauthorized crypto exchanges face up to two years in prison for trades between 5 million and 50 million forints. The penalty escalates to three years for transactions classified as "particularly large value" between 50 million and 500 million forints. Those conducting trades exceeding 500 million forints can receive prison sentences of up to five years, defined as "abuse of crypto-assets" under Hungarian criminal law.

Service providers operating unauthorized cryptocurrency exchanges face even harsher penalties. They can receive up to three years in prison for facilitating transactions up to 50 million forints. The punishment increases to five years for offenses up to 500 million forints and eight years for violations exceeding that threshold.

The new laws have created significant uncertainty within Hungary's cryptocurrency sector. Local news outlets reported that crypto companies serving the country remain confused about compliance requirements. Hungary's Supervisory Authority for Regulatory Affairs has 60 days to develop compliance frameworks, but no guidance currently exists for businesses operating in the interim period.

This regulatory gap has prompted immediate market reactions. A UK-based fintech company initially suspended all cryptocurrency services in Hungary earlier this month, citing "recently introduced Hungarian legislation" as the reason for the withdrawal. The company's website indicated the company had stopped all crypto-related services, including withdrawals from the platform, without providing a timeline for service restoration. The company's EU arm announced it was working to obtain a cryptocurrency license within the European Union to address compliance concerns.

Following the initial suspension, the company partially reinstated services, allowing only cryptocurrency withdrawals. The limited restoration suggests companies are adopting cautious approaches while awaiting clearer regulatory guidance. The legislation represents Hungary's attempt to regulate cryptocurrency activities within existing criminal law frameworks rather than creating specialized financial regulations. This approach differs from other European Union countries that have focused on licensing requirements and consumer protection measures.

Hungary's aggressive enforcement approach places it among the most restrictive cryptocurrency jurisdictions in Europe. The criminal penalties exceed those found in most other EU member states, where violations typically result in administrative fines rather than prison sentences. The 60-day compliance framework development period will likely determine whether other cryptocurrency service providers follow the company's example of suspending operations. Industry observers expect the final regulations to clarify which exchanges qualify as "authorized" under the new law.

Hungary's new cryptocurrency legislation establishes some of Europe's strictest criminal penalties for unauthorized digital asset trading, with prison sentences reaching up to eight years for major violations. The regulatory uncertainty has already prompted service suspensions from major providers, while businesses await clearer compliance guidance from Hungarian authorities.