While most nations grapple with how to regulate cryptocurrency trading, Hungary has chosen the invigoratingly unambiguous path of potential imprisonment—a regulatory approach that transforms unauthorized digital asset transactions into criminal offenses punishable by up to eight years behind bars.
Hungary’s refreshingly direct solution to crypto regulation: skip the bureaucratic maze and proceed directly to prison sentences.
The new criminal code provisions, effective July 1, 2025, establish a tiered penalty structure that would make even the most hardened tax evader pause. Individual traders face up to two years imprisonment for using unauthorized exchanges to conduct transactions between 5 million and 50 million forints ($14,600–$145,950), with sentences escalating to three years for volumes reaching 500 million forints and five years for exceeding that threshold.
The Hungarian National Bank‘s licensing requirement guarantees that virtually every crypto service provider must now navigate regulatory approval—assuming they can decipher the compliance framework that the Supervisory Authority for Regulatory Affairs (SZTFH) has sixty days to develop.
Exchange operators face considerably harsher consequences, reflecting their perceived greater culpability in facilitating what the government now considers criminal activity. Operating unauthorized platforms handling trades up to 50 million forints carries a three-year maximum sentence, escalating to five years for mid-tier volumes and eight years for high-volume operations.
The arithmetic is straightforward: facilitate more unauthorized trading, serve more time.
The immediate market response has been predictably swift, with major international platforms including Revolut and Bitstamp suspending crypto services for Hungarian users. This affects an estimated 500,000 Hungarians who suddenly find their digital asset trading options severely constrained.
The timing creates particular uncertainty, as licensing procedures remain unpublished while compliance frameworks undergo development during the interim period.
Perhaps most remarkably, holding cryptocurrencies remains perfectly legal—the legislation targets only trading activity on unauthorized platforms. This distinction creates an oddly static investment environment where Hungarians can own digital assets but face imprisonment for actively trading them through unlicensed channels.
The regulatory approach signals Hungary’s determination to control crypto activity through traditional criminal law rather than innovative financial regulation, transforming what other jurisdictions treat as compliance violations into matters requiring potential incarceration. Hungary’s criminal penalties dwarf the substantial financial penalties that cryptocurrency exchanges like BitMEX and Binance have faced in other jurisdictions for AML violations, representing a fundamentally different enforcement philosophy.
