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The Hungarian parliament voted to repeal the provisions that required a validation check for crypto asset conversions to be legal. The move also removes crypto-related offenses imposing penalties of up to eight years of imprisonment from the national criminal code.
Key Takeaways
- Hungary repealed strict local crypto validation checks to fully align with the EU’s new MiCA framework.
- The move eliminates duplicate compliance rules, allowing EU exchanges to operate freely in Hungary.
- The repealed laws previously criminalized unauthorized crypto conversions with up to 8 years in prison.
Hungary Decriminalizes Crypto Assets’ Offenses in Line With MiCA Implementation
Hungary is repealing draconian-style regulations to avoid clashes with the EU-wide Markets in Crypto Assets (MiCA) framework, dropping national requirements and offenses related to the illicit use of cryptocurrency.
The Hungarian Parliament recently passed Act XXXVIII of 2026 on the Repeal of Certain Statutory Provisions Concerning Crypto-Asset Conversion Services, which abolished the validation checks that any European exchange had to pass to operate legally on Hungarian soil.
According to András Gaál, an associate at Schonherr, a law firm, under previous rules, converting crypto assets without prior validation constituted an unauthorized crypto transaction, a crime typified in the Act C of 2012 on the Criminal Code.
The repeal, voted on July 31 and implemented on August 7, was unique to Hungary and established two crimes for the unauthorized use of crypto assets:
The first, “Abuse of crypto assets,” established that “a person who exchanges crypto-assets of significant value for money or other crypto-assets using an unauthorised crypto-asset exchange service is guilty of a misdemeanour and shall be punished by imprisonment of up to two years, unless a criminal offence of greater gravity is established,” but increased the penaltiesto to 5 years if the offense was committed committed “for a particularly significant value.”
The second offense repealed was “Unauthorized crypto-asset exchange service provision,” which established that “a person who engages in crypto-asset exchange service activities for a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,” and increased imprisonment to eight years under certain circumstances.
Katalin Horváth, partner at CMS Budapest, stressed that the Act was incompatible with the EU’s internal market and was redundant with MiCA provisions, which ensure that users can access safe crypto service providers and entered into full implementation on July 1.
“Payment institutions, crypto-asset service providers and intermediaries that have in-scope conversions routed to authorised validators should now unwind those processes,” she concluded.
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