The Hungarian Parliament passed Act XXXVIII of 2026 on July 31 to repeal the mandatory validation system for crypto conversions. The new law, which takes effect on August 7, 2026, also sweeps away two criminal provisions inherited from the previous rules. This decision ends the looming threat of legal action for an estimated 500,000 Hungarian citizens active in the digital asset market.
The old rules, in effect since July 2025, imposed a heavy burden on the industry. András Gaál of the law firm Schoenherr explained that under the previous regime, crypto conversions carried out without official validation were categorized as unauthorized transactions under Hungarian criminal law. There were two provisions governing this: one for the misuse of crypto assets carrying a maximum sentence of five years, and another for providing unlicensed crypto exchange services, which could lead to up to eight years in prison.
The impact of the rule was felt immediately on the ground. Fintech company Revolut opted to play it safe by suspending its crypto services in Hungary due to the strict regulations. Several other crypto firms even began considering options to relocate their operations to neighboring countries like Estonia and Lithuania.
Why Was This Rule Finally Repealed?
The shift in Hungary’s policy direction occurred following a drastic change in the national political landscape. In the April 2026 elections, the Tisza Party successfully seized power, ending the leadership era of Viktor Orbán, who had held control of the government for 16 years. The new Minister of Innovation and Technology, Zoltán Tanács, did not hold back criticism, calling the old crypto regulatory framework excessive and politically motivated.
External factors also pushed for this repeal. The European Commission had previously opened an official investigation into Hungary because its criminal rules were deemed incompatible with the European Union’s Markets in Crypto-Assets (MiCA) standards. This corrective measure aligns with European regulatory deadlines, as the MiCA transition period ended on July 1, 2026, and the European Securities and Markets Authority (ESMA) also recently added 57 new authorities.
One License for All
The elimination of criminal provisions and the national validation system provides breathing room for crypto service providers. Companies operating under the MiCA umbrella can now enter the Hungarian market without having to go through a separate national validation process. They can immediately focus on running their services without conflicting local regulations.
For industry players, this is a door reopened. But for Hungary’s new government, this is just the first step - the next test is to once again convince the capital and innovation that were temporarily held back to enter and establish themselves in the country.
As reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
