KEY FACTS: The European Union is set to implement stringent Anti-Money Laundering (AML) regulations by July 2027, banning anonymous crypto accounts and privacy coins like Monero and Zcash, as outlined in the Anti-Money Laundering Regulation (AMLR). The measures, detailed in the European Crypto Initiative’s AML Handbook, will prohibit crypto-asset service providers from offering anonymous accounts or supporting anonymity, enhancing coins to enhance transaction traceability and combat illicit activities. The EU’s Anti-Money Laundering Authority (AMLA) will oversee compliance, targeting high-risk entities across member states.
Source: European Crypto Initiative
EU to Enforce Crypto Ban on Anonymous Accounts and Privacy Coins by 2027
The European Union is set to implement its new Anti-Money Laundering (AML) regulations, which include a ban on anonymous crypto accounts and privacy-focused cryptocurrencies, commonly known as privacy coins, starting in 2027. The reforms, outlined in the EU’s Anti-Money Laundering Regulation (AMLR), aim to enhance oversight of crypto-asset service providers and curb the use of digital currencies for illicit activities.
The European Union’s forthcoming AMLR represents one of the most significant regulatory overhauls in the history of cryptocurrencies. According to the AML Handbook published by the European Crypto Initiative (EUCI):
“Article 79 of the AMLR establishes strict prohibitions on anonymous accounts [...]. Credit institutions, financial institutions, and crypto-asset service providers are prohibited from maintaining anonymous accounts...This prohibition extends to “crypto-asset accounts allowing anonymization of transactions” and “accounts using anonymity-enhancing coins...”
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The regulation, set to take effect in July 2027, will also impact self-custody addresses and anonymous account holders interacting with regulated entities, including crypto exchanges. The EU’s Anti-Money Laundering Authority (AMLA) will play a significant role in enfoBoldrcing these rules, with plans to select up to 40 high-risk, cross-border entities for direct supervision by July 2027, ensuring at least one entity per member state is monitored.
The AMLR is part of a framework that includes traditional financial instruments such as bank accounts, payment accounts, passbooks, and safe-deposit boxes. By aligning cryptocurrency regulations with these established systems, the EU aims to create a unified approach to combating money laundering and terrorist financing across all financial sectors.
Privacy coins, designed to obscure transaction details and maintain user anonymity, have long been a point of contention for regulators. Cryptocurrencies like Monero and Zcash utilize advanced cryptographic techniques to ensure maximum confidentiality, making it difficult for authorities to trace transactions. While these features appeal to users seeking privacy, they have also drawn scrutiny for their potential misuse in illegal activities, such as money laundering, tax evasion, and terrorism financing. The EUCI’s AML Handbook explicitly states:
“To ensure the robust application of AML/CFT requirements, crypto-asset service providers should be prohibited from offering or maintaining anonymous crypto-asset accounts or any mechanism that enables enhanced obfuscation of transactions, including through anonymity-enhancing coins.”
This stance shows the EU’s determination to prioritize transparency and traceability in the crypto sector. The ban will require crypto-asset service providers operating in at least six EU member states to comply with stringent Customer Due Diligence (CDD) measures. These measures are designed to enhance the detection of suspicious activities and ensure that financial institutions can effectively monitor transactions. The EUCI notes that:
“anonymous crypto-asset accounts and other anonymizing instruments hinder the traceability of transactions, complicating the detection of suspicious activity and the application of effective customer due diligence measures.”
The impending ban is expected to force significant changes in the cryptocurrency industry. Crypto exchanges, wallet providers, and other service providers will need to overhaul their systems to comply with the new regulations. This could involve implementing robust identity verification processes and phasing out support for privacy coins and anonymous accounts. For many operators, this shift may require a complete rethinking of their business models, particularly for those catering to privacy-conscious users.
The regulation also raises questions about the viability of privacy coins in the EU market. Monero and Zcash, two of the most prominent privacy-focused cryptocurrencies, could face delisting from major exchanges operating in the EU, potentially limiting their accessibility and liquidity. Despite this, both coins saw modest price gains on May 2, 2025, with Monero (XMR) rising 5% and Zcash (ZEC) gaining 3%, suggesting that market sentiment remains resilient in the face of regulatory pressures.
The EU’s crackdown on anonymous crypto accounts and privacy coins has ignited a polarized debate. Proponents argue that the measures are a necessary step to enhance the legitimacy of the cryptocurrency industry and attract institutional investors. The AMLR could foster greater trust in digital assets and pave the way for broader adoption by reducing the risk of illicit activities.
However, critics contend that the ban infringes on individual privacy and financial freedom. Privacy coins and anonymous accounts are often used by individuals in oppressive regimes or those seeking to protect their financial data from surveillance. The blanket prohibition on these tools could disproportionately harm vulnerable users while doing little to deter sophisticated criminals, who may find alternative ways to obscure their activities.
The EU’s move is an addition to the global trend of tightening cryptocurrency regulations. In the United States, the Treasury Department has recently cracked down on entities linked to crypto-related criminal activities, while the CIA has flagged Bitcoin as a national security issue. In Russia, a six-year ban on cryptocurrency mining in 10 regions was implemented in December 2024, citing energy concerns. Meanwhile, India is reportedly considering a new crypto ban to bolster its central bank digital currency (CBDC), arguing that CBDCs can replicate the benefits of cryptocurrencies without the associated risks.
Within the EU, the AMLR builds on the Markets in Crypto-Assets (MiCA) regulation, which came into force in June 2024. MiCA established a unified regulatory framework for crypto assets, requiring service providers to comply with strict licensing and operational standards. The delisting of Tether’s USDt (USDT) by Coinbase in December 2024, due to MiCA compliance concerns, emphasized the EU’s commitment to enforcing its regulatory agenda.
For now, the EU’s AMLR is a clear message that transparency and accountability are non-negotiable in the bloc’s vision for the future of finance. It is hoped that this vision will strengthen the crypto industry.
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