In a significant move, Hungary has issued a draft law that allows banks, investment funds, and asset managers to offer services in Bitcoin and other cryptocurrencies.
The bill aims to establish a comprehensive regulatory framework for cryptocurrencies and other digital assets and revolutionize the country’s financial sector.
Hungary Embraces Crypto
The draft law marks a significant development in the country’s financial sector, as it aligns Hungary’s regulatory framework with relevant European Union legislation towards the acceptance of cryptocurrencies and digital assets. The draft law is still under development, meaning it has been proposed but not officially enacted and come into effect. Should the legislation get approval, it would mark a significant step that allows traditional financial institutions to incorporate and offer crypto services to their customers. If approved, the bill will come into effect on the 30th of June.
Hungary has, until now, lacked specific laws governing the use of crypto. So far, no cryptocurrency is recognized as legal tender in Hungary.
Details Of The Proposed Legislation
The legislation, proposed by the Hungarian Ministry of Economy, looks to create a regulatory framework for digital assets, with the Hungarian Central Bank overseeing all crypto operations in the country. This indicates Hungary’s efforts and willingness to comply with the European Union’s regulatory standards, such as the Markets in Crypto Assets Regulation (MiCA) and strict anti-money laundering and counter-terrorism financing measures.
The bill is seen as a response to the European Union’s efforts to create consistent regulations for crypto assets. Additionally, the European Securities and Markets Authority (ESMA) is still consulting on classifying crypto assets and details of reverse solicitation under the MiCA.
EU’s Push For Regulation
Hungary’s legislation is part of a collective EU effort toward establishing a technology-neutral regulatory framework that helps integrate crypto with the traditional financial ecosystem without compromising security or compliance standards. The legislation could also encourage similar legislation across Europe as more countries attempt to foster innovation within their respective financial sectors and align with EU directives.
Tensions Between Hungarian Government And Central Bank
The legislation also comes amid escalating tensions between the Hungarian government and the central bank. According to one report, Central Bank Governor Gyorgy Matolcsy accused the government of planning to undermine the bank’s independence through proposed legal changes. The governor also criticized the government’s economic policies, such as its stimulus measures, calling the legislative proposal a direct threat to the bank’s autonomy.
A Significant Shift In Stance
The Hungarian central bank has previously not been in favor of crypto, with Governor Matolcsy stating that he backs a ban on cryptocurrency, not just in Hungary but throughout the European Union. At the time, Matolcsy had stated,
“I perfectly agree with the proposal and also support the senior EU financial regulator’s point that the EU should ban the mining method used to produce most new bitcoin. Clearly, cryptocurrencies could service illegal activities and tend to build up financial pyramids. Russia’s central bank is right, saying that “the breakneck growth and market value of cryptocurrencies is defined primarily by speculative demand for future growth, which creates bubbles.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
