Hungary's Finance Ministry: Cryptocurrencies Aren't a Legal Payment Method

  • Hungary's Finance Ministry has recently revealed it's working on cryptocurrency regulations.
  • Per the country's government, cryptos like bitcoin aren't seen as a legal payment method.

Hungary’s Finance Ministry has recently revealed the country is working on a regulatory framework for cryptocurrencies like bitcoin, although it doesn’t yet consider them a legal payment method.

According to local news outlet Portfolio (restricted access), the government has set up a working group that includes Hungary’s central bank, the Finance Ministry, and the tax authority to draft potential cryptocurrency regulations.

These are set to look into the legal and economic implications cryptocurrencies have. Per local news outlet FintechZone, which summarized the Finance Ministry’s position, this is seen as a complex task because cryptocurrencies may be used to launder money or finance terrorism.

Other risks, the post reads, include cybercrime and “consumer protection issues,” presumably because most people don’t understand cryptocurrencies. As CryptoGlobe covered, a survey in the UK found that 38% of those who invest in cryptocurrencies don’t understand them.

The Finance Ministry reportedly argued:

Under applicable domestic regulations, it can be clearly stated that cryptocurrencies are not considered a means of payment or electronic money, a financial instrument or a cash substitute.

Hungary's Finance Ministry (summarized)

The Ministry further noted the European Union (EU) has already started working on cryptocurrency regulations, and added to them late last year when most cryptocurrencies were close to their all-time highs by working to closely monitor the industry, especially when it comes to anti-money laundering (AML) checks on crypto exchanges. 

Per the news outlet, the Ministry revealed that while this was a first step to regulate the nascent industry, cryptocurrencies “still require further steps to be taken.”  Notably, Hungary’s tax laws heavily tax cryptocurrency proceeds with contributions that can go up to 22% for health contributions, and 15% as personal income tax.

As CryptoGlobe covered other countries have been adopting not-so-friendly cryptocurrency regulations. Saudi Arabian regulators recently reaffirmed cryptocurrency trading is strictly forbidden in the country, as no parties are authorized to offer crypto-related services.

On the other hand, however, the Bank of Thailand (BoT), the country’s central bank, has recently revealed local banks are allowed to open subsidiaries to invest in cryptocurrencies. Meanwhile, in the US, the Securities and Exchange Commission (SEC) set September 30 as the deadline for its decision regarding the VanEck-SolidX bitcoin ETF.

Note: Some sentences in this article were translated.