Hungary Proposes Crypto Law to Regulate Digital Investment Instruments

Hungary is eyeing to establish a comprehensive crypto regulatory framework which would enable local banks to directly offer cryptos.

The country’s move to embrace crypto comes at a time when the European Union’s Markets in Crypto Assets regulation, MiCA, is due to take effect in 2024.

Early this month, Hungary government released the draft law on crypto markets, developed by the Ministry of National Economy (NGM).

“The proposed law would regulate the future tradability of digital investment instruments,” the draft legislation noted, per a local report.

According to the proposal, NGM stressed on two key points, firstly, the incorporation of crypto services by traditional financial institutions. That said, domestic banks could directly offer cryptos to customers.

Secondly, Hungarian National Bank (MNB) would be the domestic body supervising crypto assets, it added. However, MNB’s task would not be to regulate the Bitcoin market, but only supervise the domestic trading of tokens.

Hungary has planned to implement the regulations starting June 30.

Hungary’s CBDC Moves

Last year, Hungary noted that there is no urgent need for a widely available central bank digital currency (CBDC). However, the EU member is experimenting to see if one could help the unbanked, a senior officer from MNB noted.

Anikó Szombati, Chief Digital Officer of MNB said that Hungary “would like to remain in the forefront of CBDC research.”

“In considering CBDC, you first have to identify your motivation based on either severe market failure or a very strong policy objective.”

She also stressed that the nation is exploring the possibilities of issuing a CBDC soon. Szombati added that getting more people into the financial system could offer one incentive, with 13% of Hungarian adults not having bank accounts.

In June 2023, MNB collaborated with banking services firm Perfinal to launch first live retail CBDC pilot project in EU.