The European Banking Authority has unveiled a new framework to penalize cryptocurrency issuers that violate the European Union's landmark Markets in Crypto-Assets law.
The proposal establishes a standardized process for hitting non-compliant issuers of significant tokens with potentially multimillion-euro penalties. Final fines could reach statutory ceilings of 12.5% of annual turnover for issuers of significant asset-referenced tokens, or two times the profits generated by the violation.
The move comes just days before a critical July 1 deadline. By that date, cryptocurrency firms must have secured formal licenses from national regulators to legally operate within the 27-nation bloc, ending a transitional grace period.
Cover screenshot of European Banking Authority's 14-page consultation paper.
Firms that fail to secure their regulatory passports face being forced to halt operations or risk triggering the exact infractions the new framework is designed to penalize. The world’s biggest exchange operator, Binance, has already notified European Union users that access to key services will be restricted after it failed to secure authorization before the deadline.
Binance recorded billions in daily net outflows following its announcement to halt onboarding new EU users and limit certain services. The exchange stated users will still be able to withdraw their assets.
The timing underscores the EU's strategy to position itself as the global standard-setter for digital finance, contrasting sharply with the regulation-by-enforcement approach seen in the United States.