Hungarian Bitcoiners See Silver Lining in Central Bank Warning

Pete Rizzo
Feb 20, 2014 at 00:28 UTC
Updated Feb 20, 2014 at 00:29 UTC

The National Bank of Hungary issued a warning to its citizens about the potential dangers of virtual currencies on 19th February, calling the payment method “much riskier” than other electronic payment options such as credit cards.

The central bank cited bitcoin specifically in its statements, which it said were meant to ensure current and future users had the proper knowledge before investing.

Said the official release:

“The Bank warns consumers to be extremely cautious.”

The National Bank of Hungary did acknowledge the benefits of virtual currencies, nodding to their anonymity, speed and ability to cut out intermediary financial institutions, though it went on to say that these strengths also posed “significant risks and problems”.

For example, the bank noted that its stock market regulations currently do not apply to bitcoin, and that “no legislation” protects virtual currency customers.

The statement marked the first time the National Bank of Hungary has commented on bitcoin publically, and despite the fear, uncertainty and doubt these kinds of announcements can spread, the country’s virtual currency users are choosing to view the news as a positive.

A warm reception

Speaking to CoinDesk, president of our Hungarian Bitcoin Association David Pajor suggested the bank’s statements merely echoed past releases from the European Central Bank (ECB), and that more importantly, the remarks were not extreme, like those issued from Russia before its ban.

Pajor explained:

“The Hungarian Bitcoin Association is happy to have any authority say anything about bitcoin. The government, the tax authority, the national bank, everyone was silent about bitcoin.

So, first of all it’s great to hear anything about how to treat virtual currencies. It’s a great thing.”

Pajor was particularly pleased that the bank compared bitcoin to financial assets, suggesting that he believes it is a sign that bitcoin could gain legitimacy on similar grounds. In addition, he indicated that such statements, while seemingly negative now, could help lead to positive regulation down the road.

“This is the first step I think,” Pajor said.

Community impact

Tamas Blummer, founder and CEO of Bits of Proof, echoed Pajor’s belief that the statements will help smooth relations between the local community and regulators. Blummer said that Hungary has an “active community” of bitcoin users, and that local startups are becoming increasingly interested in the technology.

“There is quite a bit of buzz about bitcoin, unfortunately the legal environment is not yet clear,” he said.

On the subject of regulation, Blummer was optimistic about the future in light of the statements as well.

Stated Blummer:

“It’s an opportunity for us to ask for more, because this at least shows that they have to say something about it.”

Recent warnings

Notably, the statements come just two days after Ukraine issued its first guidance on bitcoin, and roughly one week after Greece broke its silence on the subject.

The tone of the recent statements, many of which draw on past remarks from the ECB, increasingly suggest that decisions from the European Union will set the tone for further action in eastern Europe and Asia.

Image credit: Hungarian parliament building via Shutterstock

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