Hungary Plans to Regulate Cryptos and Enable Banks to Offer Them Directly
Hungary is taking steps to establish a comprehensive regulatory framework for cryptocurrencies, which would allow local banks to offer digital assets directly to customers. The move comes as the European Unionโs Markets in Crypto Assets (MiCA) regulation is set to come into effect in 2024. The Hungarian government recently released a draft law on crypto markets developed by the Ministry of National Economy (NGM), outlining its plans for regulating digital investment instruments.
Key Points:
- The proposed law aims to enable traditional financial institutions, such as domestic banks, to offer cryptocurrencies directly to customers.
- The Hungarian National Bank (MNB) would supervise crypto assets domestically, but not regulate the Bitcoin market.
- The regulations are planned to be implemented from June 30 onwards.
Hungaryโs Approach to Central Bank Digital Currency (CBDC)
Last year, Hungary stated that there was no urgent need for a widely available central bank digital currency (CBDC). However, the country is now exploring the potential benefits of a CBDC, particularly in addressing the issue of unbanked individuals. Anikรณ Szombati, Chief Digital Officer of the Hungarian National Bank (MNB), expressed Hungaryโs desire to remain at the forefront of CBDC research and highlighted the motivation behind considering a CBDC.
Motivation for Considering CBDC:
- Addressing severe market failure or achieving strong policy objectives.
Hungary is looking into issuing a CBDC as a means of bringing more people into the financial system. Currently, 13% of Hungarian adults do not have bank accounts. In June 2023, MNB partnered with banking services firm Perfinal to launch the first live retail CBDC pilot project in the European Union.
Hot Take: Hungary Proposes Crypto Law to Regulate Digital Investment Instruments
Hungary is taking proactive steps towards establishing a comprehensive regulatory framework for cryptocurrencies. By allowing traditional financial institutions to offer cryptocurrencies directly to customers, the country aims to embrace the growing digital asset market. The proposed law emphasizes the supervision of crypto assets by the Hungarian National Bank (MNB), without seeking to regulate the Bitcoin market itself. This approach reflects Hungaryโs commitment to fostering innovation and ensuring consumer protection in the crypto space.
Furthermore, Hungaryโs exploration of a central bank digital currency (CBDC) demonstrates its willingness to adapt to changing financial landscapes. By considering a CBDC, Hungary aims to address the issue of unbanked individuals and promote financial inclusion. The countryโs active involvement in CBDC research highlights its commitment to staying ahead of technological advancements and leveraging digital currencies for the benefit of its citizens.
Overall, Hungaryโs proposed crypto law and exploration of a CBDC reflect its forward-thinking approach to financial innovation. As other countries grapple with how best to regulate and utilize cryptocurrencies, Hungary is positioning itself as a leader in this evolving industry.
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