Hungary issues draft law allowing banks to offer crypto services

Hungary is advancing a legislative proposal that would enable banks, investment funds, and asset managers to offer services in Bitcoin and other cryptocurrencies, according to a March 1 report by Bloomberg Law.

The initiative marks a significant development in Hungary’s financial sector, aligning with a broader European movement towards the adoption of digital assets.

Should the Hungarian bill be enacted, it would represent a notable step forward in allowing traditional financial institutions to incorporate crypto services. The laws are scheduled to come into force on June 30 if they are approved.

Draft legislation

The draft legislation, proposed by the Hungarian Ministry of Economy, aims to create a regulatory framework for digital assets, with the Hungarian central bank serving as the primary supervisor.

The move is indicative of Hungary’s efforts to comply with the EU’s regulatory standards, including the Markets in Crypto Assets Regulation (MiCA) and stricter anti-money laundering and counter-terrorism financing measures.

According to Norton Rose Fulbright’s 2024 FinTech Outlook, such regulatory developments are part of a wider trend toward recognizing the importance of digital currencies in the financial industry.

The Hungarian bill is seen as a response to the EU’s efforts to harmonize regulations for crypto-assets, as the European Securities and Markets Authority (ESMA) continues to consult on the classification of crypto-assets and the details of reverse solicitation under MiCA.

EU pushing for regulation

Hungary’s legislation reflects a collective European interest in establishing a regulatory framework that is technology-neutral and can integrate crypto into the financial system without compromising security or compliance standards.

This could encourage similar legislative efforts throughout Europe, as countries aim to align with EU directives and foster innovation within their financial sectors.

The potential integration of cryptocurrencies into mainstream financial services suggests a shift in investment patterns, efficiency in transactions, and broader financial inclusion. Such a change could have far-reaching implications for Hungary’s economy and possibly influence the European financial landscape.

The inclusion of cryptocurrencies in the offerings of banks and other financial institutions marks a critical transition toward the future of finance.