EU Cracks Down on Crypto Issuers with Tough New Penalties

The European Banking Authority (EBA) has introduced a new framework for penalizing cryptocurrency issuers that violate EU digital-asset laws. The move represents a tougher enforcement stance as the trade bloc finalizes its historic regulatory architecture.

The EBA's consultation paper establishes a two-step process to determine fines, assessing the baseline severity of an infraction and factoring in aggravating or mitigating behavior. Under the proposal, issuers of significant tokens could face penalties reaching 12.5% of annual turnover or twice the profits generated by the violation.

The roll-out of the penalty framework comes at a critical juncture for Europe's digital asset industry, with many operators still seeking to secure formal licenses from national regulators ahead of a July 1 deadline. Firms that fail to obtain their regulatory passports by then face the prospect of being forced to halt operations or risk triggering infractions such as unauthorized public disclosures.

Binance, the world's biggest exchange operator, has already been affected by the new regulations, notifying European Union users that access to key services will be restricted after it withdrew its MiCA license application in Greece. The exchange recorded $1.96 billion in daily net outflows following its withdrawal announcement and saw another $2.52 billion and $1.46 billion in net outflows over the next two days.