Hungary’s move to embrace cryptocurrencies comes at a time when the global crypto market is making a comeback after a year-long market crisis.
Hungary is taking a significant step towards embracing crypto by introducing a proposed bill that would allow banks, investment funds, and asset managers to offer digital asset services to customers.
According to a Bloomberg report, the proposed law, announced by the Hungarian Ministry of Economy, aims to establish a clear regulatory framework for the issuance and use of digital assets in the country. The regulation is scheduled to take effect starting this year on June 30 upon approval.
Central Bank of Hungary to Regulate Crypto Assets
Under the proposed law, the Central Bank of Hungary, Magyar Nemzeti Bank (MNB), will oversee the regulation of crypto assets in the country. MNB will be responsible for providing a regulatory framework for digital asset services, ensuring that banks and financial institutions comply with the guidelines.
The move represents a significant shift, as before now, cryptocurrencies in Hungary lacked proper regulation with no definite classification of the virtual assets as seen in other European jurisdictions such as France and Germany, which categorized them as financial instruments.
Despite the new proposed regulation, Hungary has not yet recognized virtual assets as legal tender. However, individuals can use their credit and debit cards to purchase cryptocurrencies from local and foreign exchanges. This indicates a gradual acceptance of cryptocurrencies within the country’s financial ecosystem.
Hungary to Consider CBDCs
Hungary, known for its cautious approach towards innovation, is not only making strides to embrace crypto but also considering the possibility of issuing a central bank digital currency (CBDC).
Last year, Anikó Szombati, the chief digital officer of MNB, mentioned plans to explore CBDCs through various pilots. However, she noted that Hungary does not currently see an urgent need for a large-scale introduction of a retail CBDC.
The country’s new legislative initiative aligns with the European Union’s efforts to create a regulatory environment that accommodates cryptocurrencies while ensuring security and compliance. The law aims to integrate digital assets into traditional financial systems in a technology-neutral manner. It could also encourage other European countries to adopt similar regulatory frameworks, promoting innovation in the financial sector and aligning with EU directives.
Meanwhile, Hungary’s move to embrace cryptocurrencies comes at a time when the global crypto market is making a comeback after a year-long market crisis. The total market capitalization of cryptocurrencies recently surpassed $2 trillion, with Bitcoin (BTC) leading the way as the most valuable digital asset followed by Ethereum (ETH).
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