EU’s banking watchdog eyes fines for issuers of significant tokens

Getting your Trinity Audio player ready...

The European Banking Authority (EBA) has launched a consultation paper detailing how it intends to calculate fines for issuers of “significant” tokens who neglect or intentionally infringe on the European Union’s Markets in Crypto-Assets (MiCA) regulation, with potentially multimillion-euro penalties on the cards.

The EBA published a consultation last week on its proposed methodology for fining non-compliant digital asset issuers of significant tokens—tokens considered large enough to pose broader financial stability risks should they fail.

The consultation comes just before the July 1 deadline set by MiCA for firms that want to operate in the EU to apply for a license from a national competent authority (NCA) of one of the 27-member states or pack up. By the start of next month, any firm without a license or a pending application may be in breach of EU law if it continues to operate in the bloc and serve EU customers.

The EBA is responsible for supervising issuers of significant asset-referenced tokens (s-ART) and significant e-money tokens (s-EMT); the former being tokens thatpurport to maintain a stable value by referencing another value or right (such as gold or ‘baskets’ of other crypto assets), while the latter are crypto assets that purport to maintain a stable value by referencing the value of an official currency (such as U.S. dollar-backed tokens like Tether and USDC).

Thus, with the July deadline imminent, the EBA has developed its draft methodology to provide “a consistent and transparent approach” to imposing sanctions on issuers of significant ARTs and EMTs.

Specifically, the EU watchdog’s methodology will consist of two steps: first, establishing a basic amount for the sanction; and second, adjusting that amount based on the aggravating and mitigating factors of the individual case.

MiCA sets maximum fines, but the precise amount imposed will be decided on a case-by-case basis. For issuers of s-ARTs, the fine can be up to 12.5% of their annual turnover (revenue) in the preceding business year, or twice the amount of profits gained or losses avoided because of the infringement, where those can be determined. For issuers of s-EMTs, it’s 10% of their annual turnover in the preceding business year, or twice the amount of profits gained or losses avoided because of the infringement, where those can be determined.

The EBA said that the resulting amount may be further adjusted where necessary to reflect its supervisory and consumer protection objectives.

This could mean massive fines for large issuers if they are found in breach of MiCA rules. For example, if a significant EMT issuer such as Circle, with its USDC stablecoin and $2.7 billion turnover in 2025, were found in violation, the ceiling for the potential fine would be a whopping €270 million.

The EBA said its draft methodology was “inspired by practices applicable for similar types of fines in relation to other regulatory frameworks at EU and national level.”

The regulator invited comments and feedback on its proposals in the next three months, after which it will finalize and publish the methodology.

Watch | Tokenization on public blockchain: Transforming RWAs and finance