Quick Answer
Yes, but cryptocurrency is subject to strict regulations.
- From July 2025, exchanges require validation to be legal.
- Providers must follow strict AML laws; unauthorized exchanges are criminalized.
Legal Status of Crypto in Hungary
Cryptocurrency in Hungary occupies a complex legal space, moving from a regulatory gray area to a strictly controlled environment. While not outright illegal, the legality of crypto activities hinges on adherence to an increasingly rigid framework. As of mid-2025, all crypto-asset exchanges must be validated by an authorized provider to be considered lawful, a unique national requirement supplementing the EU’s MiCA regulation. This system is enforced by authorities like the Supervisory Authority of Regulated Activities (SARA) and the National Tax and Customs Administration, which mandate strict AML/CFT compliance, with severe penalties, including criminal charges, for unauthorized transactions.
Current Regulations
As of 2024, Hungary’s crypto regulation is primarily governed by its anti-money laundering (AML) laws and the EU’s Markets in Crypto-Assets (MiCA) Regulation. A significant national update, effective July 1, 2025, mandates that all crypto-asset exchanges must be validated by an authorized service provider who issues a compliance certificate. According to legal analysis, transactions conducted without this certificate are considered invalid, and engaging in such unauthorized exchanges has been criminalized under amendments to the Hungarian Criminal Code.
Regulatory Authorities
Several key authorities are responsible for enforcing Hungary's evolving crypto regulations.
- Supervisory Authority of Regulated Activities (SARA): SARA is responsible for authorizing and overseeing the "crypto-asset validation service providers" required for all exchanges from July 2025. This body ensures validators conduct proper due diligence and issue compliance certificates, without which a transaction is deemed illegal.
- Central Bank of Hungary (CBH/MNB): As the designated competent authority under MiCAR, the CBH is responsible for licensing and supervising most crypto-asset service providers and e-money token issuers. It also handles reporting for significant ICT-related incidents and ensures compliance with broader financial regulations.
- National Tax and Customs Administration (NTCA/NAV): This administration, particularly its financial intelligence unit, manages the mandatory AML registry procedure for crypto exchanges and custodian wallet providers. It acts as the primary AML supervising body, analyzing suspicious transaction reports to combat money laundering and terrorist financing.
Historical Context
Hungary's crypto regulation journey began with a hands-off approach, which led some early ventures to incorporate abroad for legal clarity. The first formal step was the 2017 AML Act, which brought certain providers under anti-money laundering rules. A significant policy shift occurred with the 2024 adoption of the EU’s MiCAR framework, moving toward comprehensive oversight. However, a more drastic change arrived with amendments effective July 1, 2025. These introduced a unique mandatory validation system for all crypto exchanges, criminalizing non-compliant transactions. This move has created significant legal uncertainty and concern over market competitiveness.
Compliance Requirements for Businesses in Hungary
Businesses operating in Hungary, particularly those in the financial and crypto sectors, must adhere to a strict set of compliance rules primarily outlined in Act LIII of 2017. These regulations, which align with EU directives, are designed to prevent money laundering and terrorist financing. Key requirements include:
- Internal AML/CFT Policies: Companies must establish and maintain internal anti-money laundering and combating the financing of terrorism (AML/CFT) policies. These policies need to be tailored to the company's specific risks and must be approved by the relevant supervisory authority. According to one compliance guide, they must be updated within 30 days of any regulatory changes.
- Customer Due Diligence (CDD) and KYC: Know Your Customer (KYC) procedures are mandatory when establishing new business relationships or when transactions exceed certain thresholds—such as HUF 4.5 million for general transactions or HUF 3 million for goods. This involves collecting and verifying customer information like full name, nationality, date of birth, and address using government-issued documents.
- Screening and Ongoing Monitoring: Businesses are required to screen customers against various sanctions lists (including those from the EU and UN), Politically Exposed Persons (PEP) lists, and adverse media. After onboarding, firms must conduct ongoing monitoring of customer activity to detect suspicious behavior.
- Suspicious Activity Reporting: If suspicious activity is detected, a company must file a Suspicious Activity Report (SAR) with the National Tax and Customs Administration (NAV) within five business days. The associated transaction must be suspended until the authorities complete their inspection.
- Record-Keeping: All customer transaction records must be maintained throughout the business relationship and for at least eight years after it ends. Regulators can request this period be extended to ten years.
- Sanctions Compliance: A core obligation is to monitor and implement all applicable economic and financial sanctions. This includes freezing the funds and economic resources of any individuals or entities on sanctions lists and prohibiting any transactions with them.
Why this matters for Cross-Border Payments
For businesses facilitating cross-border payments between Hungary and India, these stringent regulations introduce significant friction and risk. Indian companies must now navigate Hungary's unique validation system, adding complexity and potential delays to transactions that may have previously relied on the speed of crypto. The primary pain points include the risk of payments being legally invalidated if the Hungarian counterparty is non-compliant, alongside the severe legal penalties, creating a high-stakes environment for international trade and remittances.
How Lightspark Enables Compliant Crypto-Native Payments
Lightspark offers a platform designed to simplify crypto-native payments for businesses. Its core products, Lightspark Connect and Grid Switch, provide two distinct pathways for global money movement. Connect enables direct access to the Bitcoin Lightning Network, managing complex infrastructure like node management and liquidity. Grid Switch, on the other hand, facilitates cross-border fiat transfers by leveraging local real-time payment rails, converting currencies to BTC for transit over the Lightning Network before converting back at the destination.
These tools directly address the friction of cross-border payments by offering near-instant settlement and lower costs. For regulated institutions navigating complex rules like Hungary's, Lightspark provides essential infrastructure. Features such as audit-ready reporting, flexible key management, and built-in compliance integrations for the travel rule and OFAC screening don't handle compliance directly, but they empower businesses to meet their own stringent regulatory obligations securely and efficiently.
Learn more about how Lightspark is building the future of open, instant financial infrastructure by exploring their global payments platform.
Notice: This article is provided for informational purposes only and does not constitute legal advice.
Sources
- Czakó, Barnabás. "Hungary to criminalise crypto-asset exchange violations with restrictive validation obligation for service providers and clients." CMS Law-Now, CMS Legal, 30 June 2025, cms-lawnow.com/en/ealerts/2025/06/hungary-to-criminalise-crypto-asset-exchange-violations-with-restrictive-validation-obligation-for-service-providers-and-clients.
- Horváth, Katalin, and Erika Papp. CMS Expert Guide to Crypto Regulation in Hungary. CMS Legal, 29 May 2024, cms.law/en/int/expert-guides/cms-expert-guide-to-crypto-regulation/hungary.
- "Hungary and Cryptocurrency." Freeman Law, Freeman Law, freemanlaw.com/cryptocurrency/hungary/.
- Kereibayev, Oraz. "AML Regulations in Hungary—Full Guide." The Sumsuber, Sumsub, 10 Oct. 2022, sumsub.com/blog/aml-regulations-in-hungary/.
- Magyar Nemzeti Bank. "Anti-money laundering." MNB.hu, Magyar Nemzeti Bank, www.mnb.hu/en/supervision/regulation/anti-money-laundering.
- Szaloki, Gergely, and Noemi Csiki. "Crypto exchanges in Hungary: legal uncertainty and criminal liability from 1 July 2025." Wolf Theiss, Wolf Theiss, 18 July 2025, www.wolftheiss.com/insights/jailtime-for-exchanging-crypto-legal-challenges-in-hungary-from-1-july-2025/.
- Vági, József, and András Szondy. "Hungary: Significant changes to the Hungarian crypto market." Baker McKenzie InsightPlus, Baker McKenzie, 10 July 2025.
