Hungary Drafts Law Permitting Banks to Provide Crypto Services

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Key takeaways:

  • Hungary is pushing a bill allowing banks, investment firms, and asset managers to provide services in Bitcoin and other cryptocurrencies.
  • Such legislative moves are part of a larger trend toward acknowledging the significance of digital currencies in the financial system.

Bloomberg Law reported on March 1 that Hungary is pushing a bill allowing banks, investment firms, and asset managers to provide services in Bitcoin and other cryptocurrencies.

In line with a larger European trend toward adopting digital assets, this effort represents a noteworthy step in Hungary’s financial sector.

If the Hungarian measure becomes law, it would be a significant advancement toward integrating cryptocurrency services by traditional financial institutions. Should the laws be passed, they are expected to take effect on June 30.

The Hungarian Ministry of Economy has presented draft legislation that seeks to establish a legal framework for digital assets, with the primary supervisor being the Hungarian central bank.

Hungary’s efforts to adhere to EU regulations, such as the Markets in Crypto Assets Regulation (MiCA) and more stringent safeguards against money laundering and financing of terrorism, are demonstrated by this action.

Such legislative moves are a part of a larger trend toward acknowledging the significance of digital currencies in the financial system, according to Norton Rose Fulbright’s 2024 FinTech Outlook.

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

Hungary’s laws are a reflection of the desire across Europe to create a technology-neutral regulatory framework that allows cryptocurrencies to be integrated into the financial system without sacrificing security or compliance requirements.

This may incite European legislative initiatives as nations strive to comply with EU regulations and promote innovation in their banking industries.

The possible incorporation of cryptocurrencies into traditional financial institutions portends a change in the way people invest, increases transaction efficiency, and promotes greater financial inclusion. A shift of this kind might have significant effects on Hungary’s economy and could also have an impact on the European financial system.

A significant step towards the future of finance has been taken by introducing cryptocurrencies into banks and other financial institutions’ product offerings.

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