Canada    FinTech Guide    Chapter 15    Hungary

15. Initial Coin Offerings (ICOs)
Hungary  Hungary

The financial regulator, The National Bank of Hungary (MNB) has voiced concerns several times.

Legal Affairs

There is no explicit regulation in Hungary on ICOs or the issuance of token/coins. The MNB as financial regulator has issued repeated warnings to the public that cryptocurrencies are not regulated by it. MNB is also echoing the alerts made by ESMA to investors on the high risks of ICOs and that firms involved in ICOs need to meet any relevant regulatory requirements.

Restrictions: There are no explicit restrictions in Hungary on ICOs or the issuance, distribution and/or transfer of token/coins. One would need to make sure that the ICOs and the tokens/coins are structured so that they are not falling under the scope of those pieces of legislation, which cover (i) the issuance of currency and currency-substitute instruments, (ii) the issuance of payment instruments and electronic money, (iii) the offering of securities, (iv) the provision of investment services and (v) the management of alternative investment funds.

Licence and costs: There is no license type available.

Token classification: There is no explicit classification currently provided by Hungarian law on token/coins. In a recent ruling issued in relation to Bitcoins MNB took views that they do not classify as currency or payment instrument. As the Hungarian legal definition of securities includes the element of “embodying rights in a manner where such rights can be exercised or disposed exclusively by means of, or in possession of, them“, there may be a risk that the nature of token is classified as a security. No views have been taken by MNB in relation to securities aspect; investment aspects have not been addressed either.

Prospectus: There is no explicit requirement under Hungarian law to publish a prospectus before offering token/coins to investors.

AML/KYC: To the extent the issuer or the service provider involved in the trading is a firm falling under AML/KYC legislation, they need to follow that.

Further comments: FinTechs need to be aware that the legal situation for ICOs / token / coins in Hungary is not clear.

Contributing Authors

Lakatos, Köves & Partners

Richard Lock
Budapest, Hungary

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Chapter Index:

1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018