EU Bans Privacy Coins, Tightens Crypto AML Rules From 2027
1min read The European Union (EU) has announced a significant tightening of its anti-money laundering regulations, which will have profound implications for the cryptocurrency sector. Starting from July 1, 2027, the EU will prohibit the use of privacy coins and anonymous crypto accounts. This move is part of the new Anti-Money Laundering Regulation (AMLR), which aims to enhance transparency and combat illicit financial activities within the crypto ecosystem.
The AMLR explicitly bans financial institutions, banks, and crypto service providers (CASPs) from maintaining or managing anonymous accounts. This includes crypto accounts that enable transaction anonymization and wallets that use privacy-focused coins such as Monero or Zcash. Article 79 of the regulation outlines these prohibitions, ensuring that all financial transactions are traceable and transparent.
CASPs operating in at least six member states will be subject to direct supervision by the new anti-money laundering authority (AMLA) starting July 2027. The AMLA plans to select 40 entities based on strict thresholds, including a minimum of 20,000 crypto clients in one member state or a crypto transaction volume exceeding 50 million euros. Additionally, CASPs will be required to implement identity verification procedures for all transactions exceeding 1,000 euros. These new rules complement the MiCA framework, which is already in force to supervise crypto providers’ activities. They reflect Brussels’ desire to curb the illicit use of cryptocurrencies while strengthening sector oversight.
The regulatory tightening will force centralized crypto players to review their internal practices. Decentralized projects, on the other hand, may find themselves marginalized within the European market. The debate on privacy protection versus financial transparency is reignited, as the EU sends a strong signal that the era of anonymity is coming to an end. While transparency is becoming the norm, this regulation could also slow decentralized innovation, raising questions about fundamental digital freedoms.
The EU's decision to ban anonymous cryptos and privacy coins marks a historic turning point for the crypto ecosystem. It underscores the region's commitment to combating money laundering and ensuring that all financial transactions are transparent and traceable. As the EU stealthily advances towards a cashless society, the balance between increased surveillance and digital freedoms will be a critical issue to monitor.
