EU to ban anonymous crypto accounts and privacy coins by 2027

The European Union will be imposing Anti-Money Laundering (AML) rules that will ban privacy-preserving tokens and anonymous cryptocurrency accounts from 2027.

Under the new Anti-Money Laundering Regulation (AMLR), credit institutions, financial institutions and crypto asset service providers (CASPs) will be prohibited from having anonymous accounts or manage privacy coins such as Monero.

The European Union has finalized its Anti-Money Laundering Regulation (AMLR), set to take effect on July 1, 2027, which will ban anonymous cryptocurrency accounts and privacy coins such as Monero (XMR), Zcash (ZEC), and Dash.

What the AMLR Does?

1.      Bans Privacy Coins:

o   Coins like Monero (XMR), Zcash (ZEC), and Dash, which use privacy-enhancing technologies to obscure transactions, will no longer be permitted for use or custody by regulated entities in the EU.

2.    Eliminates Anonymous Accounts:

o   Anonymous crypto accounts and wallets will be outlawed. All CASPs, banks, and financial institutions must conduct full identity verification (KYC).

3.    Threshold for KYC:

o   Any crypto transaction over €1,000 must be accompanied by complete identity verification, aligning with standards already in place for traditional banking.

4.   Establishment of AMLA:

o   A new Anti-Money Laundering Authority (AMLA) will be created to oversee enforcement. It will directly supervise larger CASPs operating across at least six EU countries.

EU wants to align digital assets with traditional financial systems and combat illicit financial activities.

However, privacy advocates argue this infringes on financial privacy and disproportionately affects users who use privacy tools for legitimate reasons (e.g., political dissidents, whistleblowers).

But EU see it as a necessary step to combat money laundering, terrorism financing, and ransomware, especially with the rising use of crypto in illicit markets.