EBA Proposes MiCA Fines of Up to 12.5% of Revenue for Significant Crypto Issuers

The European Banking Authority has proposed a penalty framework that would allow fines of as much as 12.5% of annual revenue for significant crypto-asset issuers that violate the Markets in Crypto-Assets regulation, or MiCA.

Cointelegraph reported on June 28 that the EBA published a consultation paper on June 26 setting out how it would calculate fines for “significant” crypto-asset issuers that breach MiCA.

The proposal uses a two-step approach. It first assesses the severity of a violation and then adjusts the penalty for aggravating or mitigating factors.

MiCA is the world’s first comprehensive regulatory framework for crypto assets. It requires issuers and service providers to meet bank-like standards on compliance, consumer protection and capital requirements.

Under the proposal, the EBA could impose fines of as much as 12.5% of annual revenue on issuers of significant asset-referenced tokens, or ARTs, and up to 10% on issuers of significant e-money tokens, or EMTs. It could also levy penalties of as much as twice the profit gained from a violation.

The proposal was released ahead of MiCA’s licensing requirement taking effect on July 1. From that date, companies seeking to provide crypto-asset services or issue stablecoins in the European Union’s 27 member states must obtain formal authorization from a national regulator.

Companies that fail to secure a license may have to halt operations in the EU or face sanctions for unlicensed activity and other MiCA violations.

Binance recently announced that it would stop accepting new EU users and restrict some services from July 1 after withdrawing its MiCA license application in Greece. The exchange recorded net outflows of billions of dollars over three days after the announcement, according to the report.

The EBA will gather industry feedback through Sept. 28 before finalizing the penalty standards.