European Union to Ban Anonymous Crypto Accounts and Privacy Coins by 2027
In a significant move to enhance financial transparency and combat money laundering, the European Union (EU) has announced it will implement strict regulations banning anonymous cryptocurrency accounts and privacy coins by 2027. This development is part of a broader set of Anti-Money Laundering (AML) measures aimed at regulating crypto asset service providers (CASPs) and limiting the use of tokens that can obscure transaction details.
New Regulations Under the Anti-Money Laundering Regulation
The upcoming regulations will be enforced under the new Anti-Money Laundering Regulation (AMLR), which explicitly prohibits credit institutions, financial entities, and CASPs from maintaining anonymous accounts. Moreover, it will forbid these organizations from handling privacy-focused cryptocurrencies, including well-known tokens such as Monero (XMR) and Zcash (ZEC). As outlined in the AML Handbook published by the European Crypto Initiative (EUCI), Article 79 specifically establishes these prohibitions on anonymous accounts, underscoring the EU’s intent to eliminate anonymity in cryptocurrency transactions.
“Credit institutions, financial institutions, and crypto-asset service providers are prohibited from maintaining anonymous accounts,” the handbook states, indicating a clear directive for compliance among these financial actors.
Framework and Implementation
This regulatory framework is part of a comprehensive AML strategy, which extends beyond cryptocurrencies to also encompass traditional banking practices, including the management of bank accounts and safe-deposit boxes. The EU aims to establish uniform standards to combat illicit financial activities across different sectors.
Vyara Savova, a senior policy lead at the EUCI, remarked on the implementation phase, stating that while the overarching regulations are finalized, the specific details and interpretations of these rules will be shaped through further legislative acts handled predominantly by the European Banking Authority. "The broader framework is final, so centralized crypto projects need to keep it in mind when determining their internal processes and policies," Savova explained.
Increased Oversight of Crypto Service Providers
The new AML framework also introduces enhanced oversight for CASPs. Beginning July 1, 2027, the EU’s Anti-Money Laundering Authority (AMLA) will begin directly supervising cryptocurrency service providers operating across at least six member states. The selection process will target 40 CASPs, ensuring representation from each EU member state.
To determine which entities will be selected for this oversight, AMLA will apply "materiality thresholds," such as possessing a minimum of 20,000 customers in a member state or having total transaction volumes exceeding 50 million euros (roughly $56 million). Additionally, there will be mandatory customer due diligence on transactions over 1,000 euros ($1,100), further tightening regulatory controls.
As the EU ramps up its regulatory approach towards the cryptocurrency industry, these new measures build upon existing frameworks like the Markets in Crypto-Assets Regulation (MiCA).
Conclusion
The EU’s decision to ban anonymous crypto accounts and privacy coins reflects increasing global scrutiny of cryptocurrency practices and a commitment to ensuring transparency within the financial system. As the regulations take shape and implementation approaches, both crypto service providers and users will need to adapt to this new landscape of digital finance. The EU’s proactive measures aim not only to curb illicit activities but also to define a clearer regulatory environment for the burgeoning crypto market.
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