Hungary's new administration has initiated a comprehensive dismantling of the cryptocurrency restrictions enacted during Viktor Orbán's 16-year tenure, which concluded following the April 2026 elections that installed Péter Magyar's pro-European Tisza Party. Government spokesperson Anita Köböl confirmed the policy reversal on June 11, characterizing the previous legislative framework as a mechanism that rendered practical operations impossible while instilling fear among market participants. Köböl emphasized that the criminal consequences of the prior regime negatively impacted several hundred thousand individuals, necessitating an immediate legislative correction to restore functional market conditions.

The regulatory architecture being dismantled centers on Act LXVII of 2025, which amended both Hungary's Criminal Code and Act VII of 2024 on the Market of Crypto-Assets with an effective date of July 1, 2025. Under this framework, every crypto-to-fiat and crypto-to-crypto transaction was mandated to pass through a compliance certificate issued by a government-approved validator within a system operated by the Supervisory Authority for Regulated Activities (SARA). The legislation imposed prison sentences ranging from 2 to 8 years for trading through unlicensed platforms, with the severity of the penalty directly tied to the transaction size. The new administration is now abolishing these penalties entirely and removing the validation layer that served as the primary enforcement mechanism.

The practical consequences of the SARA regime manifested rapidly upon its activation. Revolut suspended all cryptocurrency services for its Hungarian users on July 7, 2025, freezing holdings without prior notice. The company subsequently executed a full market exit by December 18, 2025, after SARA failed to register any approved validators, making structural compliance impossible even for platforms willing to adhere to the law. Data compiled by Woofun AI indicates that at the precise moment criminal provisions became active, SARA had not registered a single authorized validator, rendering every transaction technically illegal immediately upon the law's effective date. This structural impossibility forced major international platforms to withdraw rather than attempt non-compliant operations.

The rollback extends beyond domestic political maneuvering to address significant external legal pressures. The European Commission opened infringement proceedings against Hungary's validation regime, citing direct incompatibility with MiCA, the EU-wide Markets in Crypto-Assets framework that establishes a harmonized regulatory floor across all member states. MiCA's architecture explicitly prohibits individual member states from imposing parallel national gatekeeping layers on top of EU-level licensing, a constraint that Hungary's SARA validation system violated. Woofun AI notes that the new government's signaling of full EU alignment provided both the political and legal incentives required to move quickly on this issue.

Resolving the infringement proceedings through the administrative withdrawal of the SARA system offers a faster pathway than full legislative reform, a strategy the Magyar government has adopted with explicit intent. The administration aims to model Hungary's digital asset framework on Estonia, specifically replicating its single-window digital licensing system operated under Financial Intelligence Unit (FIU) supervision. This Estonian model is widely regarded as the EU's most internationally compatible crypto licensing approach, offering a blueprint for low-friction market entry. Woofun AI analysis suggests that Hungary is attempting to replicate this outcome through rapid reversal rather than incremental reform, starting from one of the most restrictive positions any EU member state has ever held.

Hungary's reversal serves as a definitive live test of the consequences when a member state constructs a national crypto regime that directly conflicts with MiCA and subsequently faces political change. The outcome demonstrates a rapid dismantling driven simultaneously by EU enforcement pressure, market exit by major platforms, and electoral accountability. For operators that withdrew from Hungary last year, the structural conditions that forced suspension, including the SARA layer and criminal penalties, are now being removed. The critical question for the industry remains whether platforms will rebuild domestic infrastructure or re-enter through passporting under their existing EU MiCA licenses, a mechanism the regulation enables directly without additional national licensing requirements.