Hungary Enforces Harsh Crypto Penalties: Up to 8 Years Prison

@Roy, this matter is related to regulation and legal policy, so I’m assigning it to you.

Key event: Hungary has updated its Criminal Code to impose prison sentences for unauthorized crypto trading and services. Individuals using unauthorized crypto exchanges may face up to two years in prison, with penalties escalating based on the trade value. Crypto service providers offering unauthorized exchange services could face harsher penalties, ranging from three to eight years imprisonment, depending on transaction values. The law has brought confusion to crypto businesses, with Hungary’s regulatory authority yet to roll out compliance frameworks.

Hungary Imposes Prison Sentences for Unauthorized Crypto Activities

Budapest, Hungary - Hungary has enacted a significant update to its Criminal Code, introducing prison sentences for individuals and service providers involved in unauthorized cryptocurrency trading. The new legislation, which took effect on July 1, 2025, has created considerable confusion within the crypto industry, as compliance frameworks are yet to be established.

Under the amended law, individuals using an "unauthorized crypto-asset exchange service" face stiff penalties. Trading amounts between 5 million and 50 million forints (approximately $14,600 to $145,950) can result in a prison sentence of up to two years. This penalty increases to three years for transactions valued between 50 million and 500 million forints ($145,950 to $1.46 million), and can reach up to five years for trades exceeding 500 million forints.

Cryptocurrency service providers offering unauthorized exchange services face even more severe consequences. Providing services for transactions up to 50 million forints can lead to a three-year prison sentence. For transactions up to 500 million forints, the penalty is up to five years, and for amounts exceeding 500 million forints, service providers could be imprisoned for up to eight years.

The new regulations, which also require a "conversion-validation certificate" for every trade, have left the crypto sector in a state of uncertainty. Hungary's Supervisory Authority for Regulatory Affairs (SZTFH) has a 60-day window to develop and release the necessary compliance guidelines, but no such frameworks are currently available. The Hungarian National Bank will oversee the sector and require all crypto service providers to obtain a license to operate legally.

The lack of clarity has prompted some major players in the crypto market to react. UK-based fintech company Revolut initially suspended all its crypto-related services in Hungary, including withdrawals. While it later reinstated crypto withdrawals, other services remain limited. Similarly, the crypto exchange Bitstamp has also reportedly halted its services for Hungarian residents.

Critics argue that the penalties under the new Hungarian law are significantly harsher than those stipulated by the European Union's Markets in Crypto-Assets (MiCA) framework. Some industry insiders believe the stringent measures, combined with the absence of a clear path to compliance, appear designed to suppress crypto trading rather than regulate it. An estimated 500,000 Hungarians who own digital assets are affected by this new legal grey area.

Roy, your focus should be on delivering a clear, concise breakdown of Hungary's new law criminalizing unauthorized crypto activities while avoiding unnecessary technicalities. Lead with the key event—Hungary’s introduction of prison sentences for unlicensed crypto trading—and ensure the penalties for individuals and service providers are outlined in simple terms, using concrete examples from the legislation (e.g., prison terms linked to transaction sizes). Highlight the regulatory uncertainty stemming from missing compliance guidelines and the immediate industry impact, such as Revolut and Bitstamp's responses. Keep the comparison to EU regulations brief but meaningful, and wrap up by underscoring the broader implications for Hungary’s 500,000 crypto users. Trim redundancy; aim for clarity and flow.

Hungary Enforces Harsh Crypto Penalties: Up to 8 Years Prison

• Individuals face up to five years in prison for unauthorized crypto use, depending on trade size.
• Service providers risk up to eight years imprisonment without proper licensing.

Hungary has updated its Criminal Code effective July 1, 2025, introducing harsh penalties for unauthorized cryptocurrency trading and services, according to multiple local reports. The amended law imposes prison sentences for both individuals and service providers engaging in unlicensed crypto activities. Transactions using unapproved exchanges above 5 million forints (approximately $14,600) can lead to imprisonment ranging from two to five years, while service providers facilitating unauthorized trades face sentences as long as eight years for transactions exceeding 500 million forints ($1.46 million).

On July 15, 2025, Reuters reported that compliance uncertainty is already disrupting the crypto sector in Hungary. The law mandates a "conversion-validation certificate" for all trades and requires crypto service providers to secure operating licenses under the supervision of the Hungarian National Bank. Despite these requirements, Hungary’s Supervisory Authority for Regulatory Affairs (SZTFH) has yet to publish the compliance frameworks necessary to fulfill these obligations, with a 60-day deadline to do so.

The new legal measures have led to immediate repercussions in the industry. UK-based fintech company Revolut initially suspended all crypto services for Hungarian users, reinstating only withdrawal functionality soon after. Likewise, Bitstamp, a major cryptocurrency exchange, has halted its services. Industry stakeholders note that Hungary’s penalties appear far harsher than the European Union's Markets in Crypto-Assets (MiCA) framework, which also governs crypto regulations but with less severe consequences for noncompliance.

This legislative overhaul impacts an estimated 500,000 Hungarians holding digital assets, many of whom remain in a legal grey area as they await clearer directives from regulators. Observers argue that the law could be interpreted as a measure to discourage crypto trading altogether, rather than creating a fair regulatory environment for its safe and legal use.

As of July 15, 2025, 12:00 UTC, Bitcoin (BTC) is trading at $31,252, with a 1.6% decrease in 24-hour trading volume, according to CoinMarketCap. Ethereum (ETH) is trading at $2,055, experiencing a 0.8% increase over the same period.