EU Bans Privacy-Preserving Tokens, Anonymous Crypto Accounts by 2027

The European Union is set to implement comprehensive Anti-Money Laundering (AML) regulations that will prohibit the use of privacy-preserving tokens and anonymous cryptocurrency accounts starting from 2027. This move is part of a broader effort to enhance financial transparency and combat illicit activities within the crypto space.
Under the new Anti-Money Laundering Regulation (AMLR),
, , and crypto asset service providers (CASPs) will be barred from maintaining anonymous accounts or handling privacy-preserving cryptocurrencies. Article 79 of the AMLR explicitly prohibits the maintenance of anonymous accounts, ensuring that all financial transactions are traceable and transparent.The regulation extends beyond traditional financial accounts to include crypto-asset accounts that allow for the anonymization of transactions, as well as accounts using anonymity-enhancing coins. This comprehensive approach aims to close loopholes that have previously allowed for money laundering and other financial crimes.
Vyara Savova, senior policy lead at the European Crypto Initiative (EUCI), noted that while the broader framework of the regulations is final, the implementation details are still being worked out through so-called implementing and delegated acts. These acts, primarily handled by the European Banking Authority, will provide the necessary guidelines for enforcing the new rules.
Savova emphasized that centralized crypto projects, which fall under the Markets in Crypto-Assets Regulation (MiCA), need to be aware of these upcoming changes and adjust their internal processes and policies accordingly. The EUCI is actively involved in providing feedback to public consultations to ensure that the implementation details are finalized correctly.
In addition to the ban on anonymous accounts and privacy-preserving tokens, the new regulatory framework will increase oversight of crypto service providers.
operating in at least six member states will be under direct AML supervision. The initial phase will involve selecting 40 entities, with at least one entity per member state, starting from July 1, 2027. The selection process will use "materiality thresholds" to ensure that only firms with substantial operations in multiple jurisdictions are considered for direct supervision.These thresholds include a minimum of 20,000 customers residing in the host member state or a total transaction volume exceeding 50 million euros. Other notable measures include mandatory customer due diligence on transactions above 1,000 euros, further enhancing the transparency and accountability of financial transactions within the EU.
These regulatory updates are part of the EU's ongoing efforts to strengthen its oversight of the crypto industry. Building on previous measures such as MiCA, the new AML regulations aim to create a more secure and transparent financial environment, protecting both investors and the broader economy from the risks associated with anonymous and privacy-preserving cryptocurrencies.

Comments
No comments yet