Revolut pulls the plug: Why Hungary just lost one of its biggest cryptocurrency gateways

Hungary’s crypto market has hit a major obstacle after Revolut suddenly suspended its crypto services in the country.  It had hundreds of thousands of users, all of whom are now left without the simplest and most convenient way to trade crypto.

Revolut has stated that the measure is temporary and that it is related to regulatory compliance.  Hungary has introduced new crypto laws, making the field somewhat more difficult to operate in.  This is a part of a broader European trend in crypto regulations.

What Happened: Revolut Halts Crypto Trading in Hungary

Since this summer, Revolut hasn’t been operating in Hungary.  All of its services were suspended in July, and Hungarian traders have been struggling to find a replacement ever since.  The platform allowed users to buy new cryptocurrencies, stake assets, or deposit additional funds into their crypto accounts.  Therefore, almost all crypto activities are now more difficult to obtain in Hungary.

The way Hungarian holders use crypto has changed over the years.  At first, digital currencies were mostly used in crypto sports betting.  Experts such as those at CryptoManiaks have always claimed that the initial appeal of cryptos was the ability to make fast payments without providing personal information.

However, in recent years, cryptos have become widely accepted as financial assets for storing value and generating profit.  Now that there are more crypto users and the funds have a broader impact on the economy, Hungary has started regulating the field more strictly.

The Regulatory Trigger: Hungary’s New Crypto Law Explained

The EU has begun regulating crypto by imposing penalties on entities that don’t comply with the regulations, focusing on safety, transparency, and measures to combat money laundering.  Most EU countries have a uniform approach to cryptos based on these principles.

Hungary has decided to go a different route and introduce much harsher penalties.  It introduced criminal liability for unlicensed crypto activity.  Those who trade crypto on platforms without proper authorization can face up to a few years in prison.  The process for obtaining the proper approval is also more complex than the one set up by the EU’s Markets in Crypto-Assets (MiCA) framework.

This was a somewhat strange decision by the Hungarian government.  It’s seen as a pro-business administration, and other right-wing governments have started embracing cryptos, while Hungary has doubled down on its opposition to them.

How Hungarian Crypto Holders are affected

Every day, users are greatly affected by this decision, as they have lost their most important crypto tool and haven’t found a replacement in six months.  Many users have given up on crypto altogether, at least for the time being.

Others have tried to find similar services in EU countries with less strict crypto rules.  Others have decided to keep using Revolut in one of the countries where its services are still available.

Hungary vs. Europe: A Regulatory Outlier?

Hungary remains an outlier in European crypto regulation.  The broader trend is very much in favor of using crypto tools such as Revolut.  The EU has unveiled the first comprehensive regulatory framework for crypto users, and it seems other countries may model their regulations on it.

There’s also a sense that governments and traditional businesses are now behind crypto users.  This is noticeable in the efforts to support government-backed cryptos and to further emphasize the use of stablecoins alongside ordinary cryptos.  The result will be a two-tier market in which Hungary lags behind the rest of Europe.

What’s Next: Could Revolut Return?

Revolut has suggested it could return to Hungary and is making efforts to do so by coordinating its policy with the National Bank.  They have also emphasized that they work in other EU countries and have helped users who want to move their accounts from Hungary to one of the countries where their services are available.

The company has requested a license from the Hungarian National Bank under the new, stricter regulations and has obtained approval, but it will operate as a bank rather than a crypto exchange.  It’s a novel way of circumventing crypto regulations, and it remains to be seen whether it will work.

To Sum Up

Revolut, a fintech company operating in Europe that offers crypto features, was banned in Hungary due to its harsh crypto regulations.  The company hasn’t been able to operate in the country for the past six months, but has now obtained a new license from the Hungarian National Bank.  However, it still hasn’t begun providing services under this new license.

The EU, on the other hand, is pursuing a more liberal policy, allowing many crypto exchanges to operate but in a regulated, clear-rule framework.  Many Hungarian users have used Revolut in countries where it’s allowed, while it’s banned in Hungary.