Hungary Plans to Establish Comprehensive Crypto Regulations and Embrace Cryptocurrencies

The proposed legislation aims to standardize the future exchangeability of digital investment instruments and permit traditional banks to embrace cryptocurrencies.

Hungary introduces cryptocurrency law to oversee digital investment products.

📅 Last updated: March 6, 2024 05:40 EST | ⏱️ 1 min read

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Hungary is making moves to establish a comprehensive regulatory framework for cryptocurrencies that would allow local banks to directly offer digital assets to customers. This comes at a time when the European Union’s Markets in Crypto Assets regulation (MiCA) is set to take effect in 2024.

Early this month, the Hungarian government released a draft law on crypto markets, developed by the Ministry of National Economy (NGM). The proposed legislation aims to regulate the future tradability of digital investment instruments, according to a local report.

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The draft legislation highlights two key points. First, it emphasizes the incorporation of crypto services by traditional financial institutions, which means that domestic banks could soon offer cryptocurrencies directly to customers. Second, the Hungarian National Bank (MNB) would be responsible for supervising crypto assets within the country. It’s important to note that MNB’s role will focus on domestic trading of tokens and not the regulation of the Bitcoin market itself.

The regulations are scheduled to be implemented starting June 30, 2024.

Hungary’s CBDC Moves

In addition to embracing cryptocurrencies, Hungary has also been exploring the possibilities of a central bank digital currency (CBDC). Although there is no immediate need for a widely available CBDC, the country is considering its potential benefits for the unbanked population.

Anikó Szombati, Chief Digital Officer of MNB, stated that Hungary aims to be at the forefront of CBDC research. She highlighted that the motivation for considering a CBDC should be based on either severe market failure or a strong policy objective.

Szombati also emphasized that getting more people into the financial system could be one incentive for issuing a CBDC, as currently, 13% of Hungarian adults do not have bank accounts.

In June 2023, MNB partnered with banking services firm Perfinal to launch the first live retail CBDC pilot project in the European Union.

Q&A

Q: What are the benefits of Hungary’s comprehensive crypto regulations?

A: Hungary’s regulatory framework will provide clarity and legal certainty for the crypto industry. It will open up new opportunities for traditional financial institutions to offer cryptocurrencies directly to customers, enhancing access to digital assets.

Q: How will the Hungarian National Bank (MNB) supervise crypto assets?

A: MNB’s role will primarily focus on monitoring the domestic trading of tokens within Hungary. However, it will not regulate the Bitcoin market itself.

Q: What is the motivation behind Hungary’s exploration of a central bank digital currency (CBDC)?

A: Hungary is considering a CBDC to address either severe market failure or strong policy objectives. Additionally, issuing a CBDC could help include more people in the financial system, particularly the unbanked population.

Future Outlook and Investment Recommendations

With Hungary’s efforts to establish comprehensive crypto regulations and explore the possibilities of a CBDC, the country is positioning itself at the forefront of blockchain technology and digital assets. These advancements can potentially attract more crypto-related businesses, foster innovation, and improve financial inclusion.

Investors and entrepreneurs looking to tap into Hungary’s crypto-friendly environment should keep an eye on the implementation of the regulatory framework on June 30, 2024. It will be crucial to understand how traditional financial institutions incorporate crypto services and how the domestic trading of tokens is supervised by the Hungarian National Bank.

By staying informed about the latest developments in Hungary’s crypto landscape, investors can adapt their strategies accordingly and seize the opportunities presented by this growing market.

References

1. European Union’s Markets in Crypto Assets regulation (MiCA)
2. Hungarian draft law on crypto markets – local report
3. Bitcoin market analysis
4. European Union’s first live retail CBDC pilot project
5. Follow Us on Google News

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