EU watchdog proposes MiCA crypto penalty framework
- The European Banking Authority has proposed a framework that could impose fines of up to 12.5% of annual turnover on significant crypto token issuers that breach MiCA rules.
- The proposal comes ahead of the European Union's July 1 licensing deadline for crypto firms operating under the Markets in Crypto-Assets regulation.
- The consultation aims to establish a consistent penalty methodology as the EU strengthens enforcement of its digital asset rules.
The European Banking Authority (EBA) has published a consultation outlining how it would calculate financial penalties for issuers of significant crypto tokens that breach the European Union's Markets in Crypto-Assets (MiCA) regulation, with fines reaching up to 12.5% of annual turnover in some cases.
The proposed framework introduces a two-step assessment that first measures the severity of a breach before considering aggravating or mitigating factors to determine the final financial penalty.
Under the consultation paper, issuers of significant asset-referenced tokens could face fines of up to 12.5% of annual turnover, while issuers of significant e-money tokens could be fined up to 10% of annual turnover or up to twice the profits generated from the violation.
The proposal was released just ahead of the July 1 deadline requiring crypto firms to obtain MiCA licences from national regulators to continue offering services and stablecoins across the European Union.
The framework remains subject to public consultation until September 28, but firms that fail to meet the July 1 licensing deadline could face operational restrictions or enforcement action under the existing MiCA regime.
Last week, Binance said it would restrict certain services for European Union users after withdrawing its MiCA licence application in Greece and failing to secure authorisation before the deadline.
The EBA's proposal forms part of the European Union's broader effort to establish a consistent regulatory framework for digital assets by introducing standardised enforcement measures and financial penalties across the bloc.