Hungary has repealed some of its strictest cryptocurrency rules, removing a national validation system for crypto conversions as the country brings its regulatory framework closer to the European Union's Markets in Crypto-Assets regulation.
The Hungarian Parliament passed Act XXXVIII of 2026, abolishing provisions that required crypto conversions to undergo a validation process to be considered legal.
The legislation was approved on July 31 and implemented on August 7, ending a regulatory framework that was unique to Hungary within the European Union.
The changes also remove crypto-specific criminal offenses from Hungary's national criminal code, including violations that could previously result in prison sentences of up to eight years.
Crypto Conversion Validation Requirement Removed
Under Hungary's previous system, certain conversions involving digital assets had to receive prior validation before they could legally take place.
According to András Gaál, an associate at law firm Schoenherr, converting cryptocurrency without completing the required validation could constitute an unauthorized crypto transaction under Hungarian law.
The requirement affected exchanges operating in Hungary, including European platforms that otherwise operated under the broader EU regulatory framework.
With the repeal, European crypto companies will no longer have to navigate Hungary's separate conversion validation process alongside MiCA requirements.
The change is intended to eliminate regulatory overlap as the EU moves toward a more standardized cryptocurrency market.
Hungary Removes Crypto Crimes Carrying Prison Sentences
The repeal also eliminates two criminal offenses specifically associated with unauthorized cryptocurrency activity.
The first, known as “Abuse of crypto assets” covered individuals exchanging crypto of significant value through an unauthorized crypto exchange service.
Violations could result in up to two years in prison, while cases involving particularly significant values could increase the potential punishment to as much as five years.
A second offense, “Unauthorized crypto-asset exchange service provision” targeted individuals or businesses providing crypto exchange services without satisfying the country's validation requirements.
The basic offense carried a potential three-year prison sentence, while aggravating circumstances could increase the maximum punishment to eight years.
Both crypto-specific offenses have now been removed alongside the validation regime that supported them.
MiCA Makes Separate Hungarian Rules Redundant
Legal experts argued that Hungary's national system created unnecessary complications after the implementation of MiCA across the European Union.
Katalin Horváth, a partner at CMS Budapest, said the Hungarian framework was incompatible with the principles of the EU internal market and duplicated protections already established through MiCA.
The EU regulation creates common requirements for crypto-asset service providers operating across member states, including rules covering authorization, consumer protection and operational standards.
MiCA's transitional period ended on July 1, bringing the framework into full implementation and increasing pressure on unlicensed crypto businesses to either obtain authorization or stop serving EU customers.
Hungary's separate validation requirement therefore risked creating an additional national barrier for businesses already complying with EU-wide regulations.
Crypto Companies Can Unwind Validation Processes
The repeal means payment companies, crypto service providers and intermediaries that had established systems specifically to satisfy Hungary's validation requirements can now begin removing those additional procedures.
The move represents a significant reversal from Hungary's earlier approach, which imposed some of Europe's toughest criminal consequences for unauthorized crypto conversions.
Rather than maintaining a separate national regime, Hungary will now rely more heavily on MiCA's common European framework to regulate cryptocurrency businesses and protect users.
