Hungary Repeals Harsh Crypto Prison Sentences

The repeal of Act XXXVIII of 2026, which took effect on August 7, removes mandatory state-controlled validation checks for crypto-to-fiat and crypto-to-crypto transactions. Previously, these requirements forced businesses to verify the origin of funds and wallet ownership through local licensed validators. Under the abandoned law, anyone conducting transactions without such certification faced criminal charges for unauthorized exchange activities.

Legal experts and industry participants had long argued that the domestic requirements were incompatible with the EU’s Markets in Crypto-Assets (MiCA) regulation. The compliance burden prompted major firms, including Revolut, to suspend services in the country, while others considered relocating to more stable jurisdictions. The government’s decision to abandon the framework followed an investigation by the European Commission, which questioned whether the national requirements created unnecessary barriers to the EU internal market.

Katalin Horváth of CMS Budapest noted that the system effectively duplicated protections already inherent in the MiCA framework. With the removal of these specific criminal offenses—which had targeted both the "abuse of crypto assets" and the operation of unauthorized exchange services—companies are now expected to unwind their local validation processes. The change comes as the EU solidifies its own licensing landscape, with hundreds of firms now operating under passporting rights that permit them to serve customers across all 27 member states without redundant national hurdles.