Hungary’s new crypto law triggers panic with harsh prison sentences up to 5years

Hungary’s new crypto law has sent shockwaves through Europe’s financial sector by imposing prison sentences of up to eight years for unauthorized digital asset transactions.

Hungary’s new crypto law, effective July 1, imposes prison sentences ranging from two to eight years for unauthorized cryptocurrency transactions, creating immediate legal jeopardy for the nation’s estimated 500,000 retail investors.

Crypto traders face jail under Hungary’s new crypto law

Hungary’s new crypto law criminalizes crypto transactions conducted without regulatory approval. Individual offenders can face up to two years in prison for trading under 50 million Hungarian forints ($146,000). Offenses involving trades between 50 million and 500 million forints ($1.46 million) carry up to three years imprisonment. Transactions exceeding 500 million forints now carry a five-year sentence.

Worse still, crypto exchange operators without proper state validation face up to eight years behind bars, depending on the scale of operations.

The law states:

“A person who engages in crypto-asset exchange service activities for a significant value in violation of a validation obligation under the Act on the market of cryptoassets is guilty of a felony and shall be punishable by imprisonment for up to three years… for a particularly large value… two to eight years for a particularly significant value.”

These amendments were passed to bring Hungary in line with the European Union’s MiCA (Markets in Crypto-Assets) regulation, yet critics say the country has taken the “harshest path possible.”

Mass confusion clouds enforcement of hungary’s new crypto law

Despite its severity, Hungary’s new crypto law remains murky in implementation. With no clear compliance framework in place, both investors and businesses are left in legal limbo.

According to Telex, a leading Hungarian news outlet, the law could affect an estimated 500,000 crypto holders in the country. Many are now uncertain whether they could face criminal charges simply for engaging in previously legal trading activities.

“It’s not just the black-market actors this law targets—it could criminalize ordinary investors too,” said Gábor Gyenes, a Hungarian blockchain legal analyst. “Without proper guidance, people could be punished for transactions they believed were lawful.”

The Hungarian Financial Supervisory Authority (SZTFH) has been given 60 days to publish a compliance roadmap. Until then, widespread uncertainty is expected to grip the crypto sector.

The chilling effect of Hungary’s new crypto law was almost immediate. Fintech giant Revolut promptly suspended all crypto services for its Hungarian users following the law’s enactment.

“In accordance with recent changes in Hungarian regulations, we have unfortunately made the decision to suspend all cryptocurrency services for our customers in Hungary,” Revolut confirmed in a public statement.

Though Portfolio.hu later reported that crypto withdrawals have resumed on the platform, full services are still on hold pending clarity from Hungarian regulators.

Experts warn of overregulation risks

Analysts warn that while regulation is essential, Hungary’s new crypto law could have long-term economic drawbacks.

“This approach could push crypto innovation out of Hungary,” noted Zoltán Ács, crypto policy researcher at the Budapest Institute for Economic Policy. “We’re seeing regulatory overreach without a safety net for legitimate users and startups.”

Others are calling for an urgent revision. According to European Crypto Initiative (EUCI) policy lead Maria Potenza:

“Hungary’s position contradicts the broader EU spirit of fostering innovation while regulating risk. The country risks isolating itself from the European digital finance wave.”

Hungary’s new crypto law underscores a growing tension between regulatory control and blockchain freedom.

While aimed at combating money laundering and fraud, the law’s punitive nature and vague guidance may ultimately alienate legitimate investors, fintech firms, and blockchain startups.

With the countdown ticking on SZTFH’s compliance framework, market watchers are urging swift and transparent communication from Hungarian authorities.