Hungary is poised to take a significant leap forward in the regulation of cryptocurrencies with the proposal of a new law aimed at governing digital investment instruments. This move comes at a critical time as the European Union prepares to implement the Markets in Crypto Assets (MiCA) regulation in 2024, setting a precedent for member states to align with broader regulatory frameworks.
Draft Law on Crypto Markets
Earlier this month, the Hungarian government, through the Ministry of National Economy (NGM), released a draft law targeting the crypto market. The legislation is designed to pave the way for the future tradability of digital investment instruments within the country. According to reports, the NGM has highlighted two primary objectives with this proposal. First, it seeks to enable traditional financial institutions to incorporate crypto services, allowing domestic banks to offer cryptocurrencies directly to their customers. Second, the Hungarian National Bank (MNB) is designated as the supervisory body for crypto assets within Hungary, with a focus on overseeing domestic token trading, rather than regulating the global Bitcoin market.
Hungary’s Approach to Crypto Regulation
The proposed regulatory framework demonstrates Hungary’s proactive stance in integrating cryptocurrencies into its financial ecosystem. By allowing local banks to offer digital currencies, Hungary aims to provide its citizens with secure and regulated access to crypto investments. Moreover, the appointment of MNB as the supervisory authority ensures that crypto trading within the country adheres to high standards of transparency and security.
Hungary’s CBDC Moves
Despite the rapid development in crypto regulation, Hungary has taken a cautious approach towards the adoption of a Central Bank Digital Currency (CBDC). Anikó Szombati, MNB’s Chief Digital Officer, emphasized that the country is keen on staying at the forefront of CBDC research without rushing into a widespread rollout. The primary motivation behind exploring a CBDC is to address the issue of financial inclusion, with a significant portion of the Hungarian population remaining unbanked.
In June 2023, in collaboration with Perfinal, a banking services firm, MNB initiated the first live retail CBDC pilot project in the EU. This step signifies Hungary’s commitment to exploring digital currencies’ potential to enhance financial accessibility and efficiency.
Implementation Timeline
Hungary has set a target date of June 30 for the implementation of these crypto regulations. This timeline indicates the country’s urgency in establishing a regulatory framework that aligns with the impending EU-wide MiCA regulation, ensuring that Hungary remains a competitive and innovative player in the global financial technology landscape.
