2025-11-18 | Crypto
Regulatory Environment: EU and Hungarian Developments
The MiCA Regulation
Certain crypto-assets have already fallen under EU regulation pursuant to Directive 2014/65/EU (MiFID II), as they qualify as specific financial instruments. Issuers of such crypto-assets and the entities performing activities related to them are subject to the full scope of EU legislation. However, the directive did not cover all types of crypto-assets, which made further regulation necessary.
In 2023, the European Union adopted the MiCA Regulation (Markets in Crypto-Assets, Regulation (EU) 2023/1114), making it the first comprehensive EU-wide framework governing the crypto-asset market. The regulation introduces a structured legal regime for actors within the crypto ecosystem: from the issuance of crypto-assets to the operation of crypto-asset service providers, it covers a wide range of activities. Its objective is to establish harmonised rules to enhance consumer protection, investor protection, financial stability, and innovation.
Hungarian Legislative Changes
Act VII of 2024 on the Crypto-Asset Market
Following MiCA, Hungary implemented Act VII of 2024 on the Crypto-Asset Market, which entered into force on 30 June 2024 but underwent significant amendments effective as of 1 July 2025.
Under the currently applicable rules:
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The President of the Supervisory Authority for Regulated Activities (SZTFH) is authorised to issue a decree establishing the procedure for licensing legal persons performing crypto-asset exchange validation services.
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A crypto-asset may only be exchanged for fiat currency or another crypto-asset after a compliance declaration has been issued by a duly authorised service provider.
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Supervision over service providers is vested in the SZTFH, which also has the competence to revoke licences.
Amendments to the Criminal Code Concerning Crypto-Assets
Amendments to the Criminal Code effective 1 July 2025 introduce criminal liability for crypto-asset-related misconduct and for the unauthorised provision of crypto-asset exchange services.
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Crypto-asset misconduct is committed by anyone who, through the use of an unauthorised crypto-asset exchange service, converts a crypto-asset of significant value into fiat currency or another crypto-asset.
Maximum penalty: 5 years’ imprisonment. -
Unauthorised provision of crypto-asset exchange services occurs when an individual performs crypto-asset exchange activities of significant value in breach of the statutory validation obligation.
If committed in particularly significant value, the penalty may be up to 8 years’ imprisonment.
In summary:
As of 1 July 2025, only licensed service providers may legally conduct crypto-asset exchange activities. Otherwise, both the user and the provider may face criminal sanctions, including imprisonment. The SZTFH may revoke a provider’s licence or prohibit its operation for up to 5 years. All transactions performed by unauthorised providers are deemed invalid.
Jurisdictional Issues – Extending Hungarian Criminal Jurisdiction in Crypto Cases
Territorial Principle
The Hungarian Criminal Code generally applies to offences committed on the territory of Hungary. Activities carried out from a Hungarian IP address are also deemed to be committed within Hungary.
Personal Principle – Based on Nationality
Hungarian criminal law applies even if a Hungarian citizen commits an offence abroad. Thus, if a Hungarian citizen trades crypto on Binance without the required authorisation, they may be held liable under Hungarian law.
Protective Principle – Protection of State Interests
Hungarian criminal law may apply even to foreign offenders if the act is committed against the legal order or economic interests of Hungary. Based on this principle, a foreign service provider regularly offering crypto services to Hungarian clients without satisfying Hungarian legal requirements may also be held liable.
Why Is Jurisdiction Especially Problematic in Crypto Matters?
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Technological borderlessness – internet-based activities cannot be clearly “localised”.
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Foreign service providers often fall outside Hungarian jurisdiction unless they have domestic presence.
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Legal uncertainty – users may not always know when their conduct is considered “unauthorised”.
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Enforcement challenges – practical difficulties arise in enforcing Hungarian criminal law against entities based in offshore jurisdictions (e.g. Cayman Islands, Malta).
What Should the Average Crypto User Expect?
According to the Laws Currently in Force:
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The amendments entered into force on 1 July 2025.
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Cryptocurrency may be exchanged only through licensed providers, yet the SZTFH decree on licensing procedures has not yet been issued.
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Any transaction lacking the required validation is invalid.
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Authorities have the power to investigate, seize assets and impose sanctions—imprisonment is possible for using or providing non-authorised services.
In Practice:
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A large-scale wave of investigations against thousands of private individuals is unlikely, especially not immediately after the law’s entry into force.
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Most service providers are unlikely to release user data without a formal authority request.
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The legislation is widely viewed as a warning directed primarily at major market participants, such as Revolut, which many private individuals also use for crypto investments.
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Experts anticipate further amendments; the system is still immature and the implementing decree is not yet finalised. Without practical examples, it remains difficult to predict how authorities will apply the new rules.
Every current and prospective crypto trader is strongly advised to monitor legislative developments and act strictly in accordance with the applicable rules.
If you require assistance concerning information technology law or the legal aspects of cryptocurrency transactions, please feel free to contact our law firm.
