Key Points
- Hungary is planning to introduce a bill that would allow banks and other financial institutions to offer crypto services.
- The Central Bank of Hungary will regulate these digital assets and the country is also considering the possibility of issuing a CBDC.
Hungary is preparing to embrace cryptocurrency by proposing a bill that would permit banks, investment funds, and asset managers to offer digital currency services to their customers.
The proposed legislation, announced by the Hungarian Ministry of Economy, aims to create a clear regulatory framework for the issuance and use of digital assets in the country. The regulation is set to take effect from June 30 this year, subject to approval.
Regulating Crypto Assets in Hungary
The proposed bill stipulates that the Central Bank of Hungary, Magyar Nemzeti Bank (MNB), will be in charge of regulating crypto assets in the country. The bank will be tasked with ensuring that financial institutions adhere to the regulatory guidelines for digital asset services.
This is a significant change, as cryptocurrencies in Hungary previously lacked proper regulation and were not clearly classified as they are in other European countries like France and Germany. However, virtual assets are not yet recognized as legal tender in Hungary.
Despite this, individuals can use credit and debit cards to purchase cryptocurrencies from both local and international exchanges, indicating a gradual acceptance of digital currencies within the country’s financial ecosystem.
Consideration of CBDCs in Hungary
Hungary, known for its cautious approach to innovation, is not only moving towards adopting cryptocurrency but is also contemplating the issuance of a central bank digital currency (CBDC).
Anikó Szombati, the chief digital officer of MNB, mentioned last year that the bank is exploring CBDCs through various pilot programs. However, she also noted that Hungary does not currently see an urgent need for a large-scale introduction of a retail CBDC.
Hungary’s new legislative initiative aligns with the European Union’s efforts to create a regulatory environment that accommodates cryptocurrencies while ensuring security and compliance. The law aims to integrate digital assets into traditional financial systems in a technology-neutral manner.
This could potentially encourage other European countries to adopt similar regulatory frameworks, promoting innovation in the financial sector and aligning with EU directives.
Hungary’s decision to embrace cryptocurrencies comes at a time when the global crypto market is recovering from a year-long market downturn. The total market capitalization of cryptocurrencies recently exceeded $2 trillion, with Bitcoin (BTC) leading the way as the most valuable digital asset, followed by Ethereum (ETH).
