EU Watchdog EBA Proposes Crypto Fines Up to 12.5% Revenue

The European Banking Authority (EBA) detailed a proposed penalty framework on Friday, outlining significant fines for non-compliant significant token issuers. Under the proposed rules, these entities could face penalties equivalent to up to 12.5% of their annual revenue. This framework is a direct consequence of the Markets in Crypto-Assets (MiCA) regulation, which came into effect in June 2024, establishing a comprehensive legal basis for crypto-asset services and issuers within the European Union.

The EBA's proposal aims to ensure robust enforcement of MiCA's requirements, which cover areas such as transparency, disclosure, and operational standards for crypto-asset service providers (CASPs) and issuers. The significant revenue-based penalty is designed to act as a strong deterrent against non-compliance, particularly for larger, more established players in the crypto market. The EBA has opened a public consultation on the draft regulatory technical standards (RTS) for the penalty framework, inviting feedback from industry stakeholders and national competent authorities.

In addition to the revenue-based fines, the proposed framework includes other administrative penalties and measures that can be imposed on firms failing to adhere to MiCA's provisions. These could include public warnings, orders to cease infringements, and temporary bans on specific activities. The EBA stressed that the severity of the penalties would be determined based on factors such as the nature, gravity, and duration of the infringement, as well as the size and financial capacity of the undertaking concerned.

The introduction of these stringent penalties marks a significant step in the EU's efforts to regulate the burgeoning crypto-asset sector. The MiCA regulation and the EBA's enforcement framework are intended to enhance investor protection, ensure market integrity, and foster financial stability by bringing crypto activities under a clear supervisory regime. The public consultation period for the proposed RTS will run until September 2024, after which the EBA will finalize the standards for submission to the European Commission.