Hungarian authorities have eliminated the country’s crypto transaction validation system after determining that the requirement conflicted with European Union rules. The change removes mandatory third-party verification for certain conversions and allows renewed activity under the MiCA regulatory framework. CoinCash is preparing a phased return to the market after receiving direct authorization from Hungary’s National Bank.

Legislative body removes crypto validation mandate

Lawmakers passed new legislation that abolishes the validation requirement previously imposed on crypto asset service providers and certain transactions. The law also removes related criminal penalties tied to crypto misuse and unlicensed exchange activity. Companies will still be required to comply with the licensing, consumer protection, and regulatory obligations set out under MiCA.

The validation regime took effect on July 1, 2025, after amendments were introduced through Hungary’s digital asset legislation. Under the system, authorized validators reviewed the source of assets, wallet ownership information, customer identification, and transaction history before issuing compliance certificates. Without that certification, affected conversions had no legal standing.

Government representatives said the extra procedure went beyond European requirements and interfered with normal market operations. Hungary introduced the system at the same time as MiCA while also shortening the transition period available to service operators. The European Union had allowed national transition arrangements to continue until July 1, 2026, making the repeal a step toward aligning domestic rules with the broader EU timetable rather than adding a separate local layer.

Previous rules disrupted crypto operations

The earlier framework created uncertainty for consumers, platforms, and domestic service providers. Several companies paused operations, reduced their local offerings, or considered moving activity to other European jurisdictions. Trading volumes later declined as firms worked through overlapping verification and licensing obligations.

Earlier criminal provisions also imposed prison terms for unlicensed crypto trading and exchange activity. Penalties increased depending on transaction volume and could reach eight years in severe cases. Industry advocates argued that the sanctions discouraged legitimate participation and made compliance planning more difficult.

Hungary began moving to reverse the framework after the April 2026 change in national leadership. The new administration sought closer alignment with MiCA and withdrew transaction-specific oversight. It also indicated plans to remove prison penalties linked to activity beyond the previous validation system, which matters for firms deciding whether to restore services locally or keep operations focused on other EU jurisdictions.

CoinCash receives MiCA authorization

Tiwala Solutions, the operator of CoinCash, received MiCA authorization from Hungary’s National Bank on July 20. The license covers custody services, exchange operations, transfers, investment consultation, and portfolio management. CoinCash said the review took several months and required extensive compliance preparation.

The Budapest-based company voluntarily suspended services in December 2025 while pursuing approval. The pause allowed it to restructure operations around MiCA standards and domestic supervisory requirements. Following the approval, CoinCash plans to relaunch products in stages and expand additional regulated services.

The repeal removes an additional verification layer that had existed alongside standard MiCA requirements. Hungary will continue regulatory oversight while allowing licensed firms to complete qualified transactions without validator documentation. As a result, the country’s digital asset market can resume under a more streamlined European regulatory framework, with firms now operating under one set of EU-aligned compliance rules rather than two overlapping systems.