- EU bans privacy coins and anonymous crypto accounts under AMLR, effective July 1, 2027. Monero, Zcash, Dash to be restricted.
- Starting 2027, EU crypto rules demand ID checks for €1K+ transfers and outlaw privacy coins like Monero and Zcash.
- AMLA to supervise top EU crypto firms as new AML rules ban anonymous accounts and privacy-preserving coins.
The European Union has officially adopted the Anti-Money Laundering Regulation (AMLR), a sweeping legislative package to bolster financial oversight within the digital asset sector. Starting on July 1, 2027, the regulation prohibits privacy-preserving cryptos and anonymous cryptocurrency accounts in all EU member states.
Article 79 of AMLR favors prohibiting credit institutions, financial institutions and crypto asset service providers (CASPs) from having or running anonymous accounts, as mentioned in the AML Handbook published by the European Crypto Initiative (EUCI). In addition, this applies to all European financial systems, including crypto platforms. The regulation also extends to bank accounts, safe deposit boxes, passbooks, and other crypto accounts that can anonymize transactions.
In addition, Monero (XMR), Zcash (ZEC), and Dash will also be prevented from transacting with regulated entities. These measures are part of a push to bring digital assets closer to being regulated under strict anti-money laundering (AML) rules.
New Supervisory Authority to Oversee Compliance
The new supervisory authority, the Anti-Money Laundering Authority (AMLA), will be set up by the EU to ensure enforcement. This body will directly monitor crypto service providers operating in multiple EU countries. EUCI reports that AMLA will initially monitor at least one entity from each EU member state by selecting 40 CASPs for direct supervision.
Certain entities must meet certain thresholds to be directly supervised. The others include having a customer base of at least 20,000 residents in the host member state or carrying out transactions exceeding 50 million euros in volume. These firms are to start the selection process on July 1, 2027.
AMLA will implement and delegate acts to interpret the regulation. These actions will form the basis for how regulation will practically apply and will be dealt with primarily by the European Banking Authority. The European Crypto Initiative continues to feed into this process to improve these laws.
Mandatory Identity Checks for Large Transactions
In addition, the AMLR features new customer due diligence (CDD) obligations applicable to crypto transactions. More specifically, identity verification requirements must be applied to all transactions of digital assets over 1,000 euros. The requirement is aimed at all crypto exchanges and wallet providers to enable full traceability of large-scale transfers.
These rules are compatible with policies to address money laundering and other financial activity for illicit purposes in the financial sector. The EU seeks to eliminate cryptocurrencies’ use as an anonymous means of payment and align the sector with more comprehensive AML frameworks.
The Impact on Crypto Service Providers and the Privacy Coins
From 2027, the implementation date, crypto-asset service providers operating across the EU must review and update their compliance frameworks. The new regulations forbid access to platforms with privacy coins or privacy-enhancing features. This involves turning off or removing services that layer transaction anonymization or unmask user identity.
These changes have their legal basis in the broader AML package which consists of AMLR, AMLD and AMLAR. The next task details how these will be implemented while finalizing core regulations. EUCI confirmed that implementation was underway, and public consultations are still open to feedback on the delegated acts.
