On-shore VASP in Hungary

VASP Registration: Under the transposition of the EU's 5th and 6th Anti-Money Laundering Directives (AMLD5/AMLD6), custodial wallet providers are classified as Virtual Asset Service Providers (VASPs).

Obligation: VASPs, including those offering custodial services, are required to register with, or be licensed by, the Hungarian Financial Supervisory Authority (primarily the Magyar Nemzeti Bank - MNB, the Central Bank of Hungary, which oversees financial market supervision) for AML/CTF purposes.

Purpose of Registration: This registration primarily obliges the entity to comply with AML/CTF requirements, such as customer due diligence (KYC), transaction monitoring, and suspicious activity reporting, rather than specific operational custody rules.

Act CXXXVI of 2013 on the prevention and combating of money laundering and terrorist financing (Pmtv.) – This is Hungary's primary AML law, amended to include virtual asset service providers.

Authorization as a CASP: Under MiCA, any entity providing "custody and administration of crypto-assets on behalf of third parties" will be classified as a Crypto-Asset Service Provider (CASP) and will require prior authorization by a national competent authority (in Hungary, this will be the MNB).

Scope: This authorization is comprehensive and covers specific operational, organizational, and prudential requirements, going far beyond mere AML registration.

Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (MiCA).

Specifically, refer to Article 53 ("Authorisation of crypto-asset service providers") and Title V (Articles 59-67) ("Operating conditions for crypto-asset service providers").

Key Requirements (Article 67):

Keep client crypto-assets and funds separate from their own crypto-assets and funds.

Maintain records and accounts that allow for the immediate segregation of client crypto-assets and funds from own assets and from those of other clients.

Return client crypto-assets and funds without undue delay upon their request.

Evidence fact hu.aml.no-specific-explicit-statutory-rules-for not found (may have been renamed).

No specific, explicit statutory insurance/bonding requirements for crypto custodians beyond general business insurance that any company would hold.

No specific, explicit mandates for the use of cold storage (offline storage of private keys) under current Hungarian law.

No formal legal definition of a "qualified custodian" specifically for crypto assets under current Hungarian law.

No de minimis threshold. For any amount, the originating VASP must obtain and submit specific information about the originator and beneficiary, and the beneficiary VASP must receive and store this information.

Above €1,000: When a transfer from an unhosted wallet to a VASP, or from a VASP to an unhosted wallet, exceeds €1,000, the VASP must collect and verify information about the originator or beneficiary, respectively.

Below €1,000: Below this threshold, simplified due diligence may apply, but VASPs are still expected to implement risk-based controls.

Store the information securely and for the legally required period (typically 5 years, extensible to 10 years).

Detect missing or incomplete information and have procedures for handling such cases (e.g., rejecting or suspending transfers, reporting to authorities).

Fines: Significant monetary fines, which can be substantial, especially for legal entities (up to a certain percentage of turnover or a fixed high amount, whichever is greater). The EU TFR itself mandates that penalties for legal persons should be at least €5 million or 10% of annual turnover, and for natural persons at least €5 million.

Corporate Income Tax (CIT): Profits derived from virtual asset activities are subject to the standard 9% Corporate Income Tax (CIT).

Accounting Rules: Companies must follow Hungarian accounting standards (often based on IFRS for larger entities) for valuing and reporting virtual assets.

Issuing warnings against unlicensed service providers (often foreign entities).

Outcome: The MNB prohibited Xifra Lifestyle from offering its services to Hungarian residents. The MNB also filed a criminal complaint against the unknown perpetrators. The platform subsequently largely ceased operations in Hungary.

Regulator Name: Magyar Nemzeti Bank (MNB - Hungarian National Bank)