Hungary Says Cryptocurrencies are Not Legal Payment Method

Cryptocurrencies do not qualify as a legal tender, electronic cash, financial instrument or cash equivalent under the current Hungarian legislation, according to a statement of the country’s Finance Ministry quoted by local media.

According to a publication of the Hungarian financial news website Portfolio, Hungary is currently looking into setting up regulations for crypto instruments. The central bank, the tax authority and the finance ministries have joined to establish a working group to evaluate the legal, economic, tax and law enforcement implications.

According to the Hungarian technology website Fintechzone, the government has decided to start working on crypto regulation due to its increasing popularity, despite the associated risks.

"The possible regulation of crypto devices in Hungary is indeed a complex task, and its issue can not be treated as a civil law phenomenon in itself,” the ministry said. “From the legislative point of view, the use of cryptocurrencies involves many risks, such as the risk of money laundering and terrorist financing, supervisory and consumer protection issues or the threat of cybercrime.”

The ministry noted that the crypto industry needs tighter regulation than the one provided on EU-wide level regarding the anti-money laundering measures on cryptocurrency exchanges. Yet, the eventual legislation should not be so strict as to stifle innovation and technology, but only to minimize the risks.

Hungary is not the only European country to step up regulation of the cryptocurrency industry. Last week, it became clear that a group of Ukrainian MPs has drafted a bill providing for the taxation of profits from crypto trading. At the same time, other countries like Malta, have already regulated the industry and are attracting major players.