prison for crypto trading and fintech exodus

From July 1st, Hungary has introduced some of the most restrictive crypto laws in the world, generating a wave of concern and uncertainty among citizens, fintech companies, and investors. 

The new regulatory framework, which came into effect without clear guidelines, risks criminalizing the trading of digital assets for hundreds of thousands of Hungarians and pushing the main companies in the sector to leave the country.

Revolut suspends crypto services in Hungary: first tangible consequences

The first significant reaction came from Revolut, the London-based digital bank with over 2 million customers in Hungary. The institution announced the immediate suspension of all services related to cryptocurrencies in Hungary, including purchases, staking, and deposits.

Users can still sell their holdings and transfer some tokens to external wallets, but no timeline has been provided for the restoration of services. The other banking services of Revolut, however, remain active.

This decision reflects the seriousness and uncertainty generated by the new regulations, which caught both companies and users unprepared.

Prison for Unauthorized Trading: What the Law Provides

The new legislative framework introduces two new criminal offenses: abuse of cryptocurrencies and provision of unauthorized cryptocurrency exchange services. The penalties are particularly severe:

• Up to 2 years of imprisonment for those who conduct basic transactions through unauthorized exchange services.
• 3 years of imprisonment for operations of “particularly high value” (over 50 million florins, approximately 140,000 dollars).
• Up to 5 years for transactions exceeding 500 million forints.
• For service providers without authorization, the penalties can reach 8 years of imprisonment for the largest operations.

Half a million Hungarians in uncertainty

According to industry estimates, approximately 500,000 Hungarian citizens have purchased cryptocurrencies using legitimate and taxed income. However, the broad and vague language of the new law, combined with the absence of operational guidelines, creates a legal gray area: activities that were perfectly legal until yesterday now risk being criminally prosecuted.

A source from the sector, who remained anonymous, emphasized how the regulation is in fact unenforceable: 

“This is legislation to which no one can conform from the moment it comes into force.”

The Autorità ungherese di vigilanza finanziaria (SZTFH) has 60 days to define the compliance frameworks, but at the moment there are no official indications.

Misalignment with the European Union: the MiCA case

The timing of the Hungarian tightening appears even more problematic when considering that, starting from July 1st, the European regulation MiCA (Markets in Crypto-Assets) also comes into effect, designed to harmonize cryptocurrency rules across the entire EU. While MiCA aims to create a uniform regulatory framework favorable to innovation, the Hungarian approach stands out for its rigidity and the risk of isolation compared to other member countries.

An industry analyst has called Budapest’s decision to adopt such restrictive rules “incomprehensible” just as Europe is trying to harmonize regulation. Some EU countries have postponed the implementation of MiCA, others are already processing compliance applications, but none have taken drastic measures like Hungary.

Flight of companies and risk of isolation

Regulatory uncertainty and criminal sanctions risk causing a true exodus of società fintech e startup crypto from Hungary. Several local companies are already considering relocating their operations to more favorable jurisdictions, such as the Baltic States or other European countries.

According to a venture capital source, “the startup ecosystem depends on the ability to move quickly abroad. These measures risk devastating the sector, causing a flight of talent and capital.”

The crackdown on cryptocurrencies is part of a broader context of regulatory tightening by the Hungarian government, which has recently also introduced restrictions on foreign company acquisitions and other business activities. According to critics, these measures aim to target urban, educated, and affluent voters, who are less inclined to support the ruling Fidesz party.

Some observers speculate that the crackdown on cryptocurrencies is linked to fears of capital flight, especially after the approval of the controversial law on “protection of sovereignty,” which diverts some citizen donations to the State’s coffers.

Impact on global platforms and anticipation of clarifications

Regarding large international platforms like Coinbase, Binance or Bitpanda, it is unlikely that the new law will be applied directly against them. However, companies registered in Hungary and individual investors now find themselves in a situation of strong legal uncertainty: local businesses can no longer operate legally, while foreign competitors continue to serve the market.

The Hungarian crypto community eagerly awaits clarification from regulatory authorities. Industry groups have already requested guidance from the Ministry of National Economy and SZTFH, but so far no official responses have been received.

In the meantime, the sector faces a difficult choice: suspend operations, relocate abroad, or risk operating in violation of criminal law while awaiting clearer guidelines.

A choice that isolates Hungary in the Europe of cryptocurrencies

The developments in Hungary represent a stark contrast with the approach of other European countries, which are increasingly open to innovation in the field of digital assets. The concrete risk is that the country isolates itself within the European Union precisely at the moment when the cryptocurrency sector is experiencing a phase of growth and shared regulation.

The regulatory tightening, in addition to threatening Hungary’s competitiveness and attractiveness for fintech companies, risks penalizing hundreds of thousands of citizens and hindering innovation in a strategic sector for the future of the digital economy.