Europe to Impose Trading Ban on Privacy Coins Starting from 2027
The European Union has passed new anti-money laundering regulations, effective from 2027, aimed at combating the misuse of the financial system for money laundering and terrorist financing. The regulations address cryptocurrencies in several sections and will be coordinated by the Anti-Money Laundering Authority (AMLA), established in Frankfurt on July 1, 2025.
The new regulations will require crypto service providers to ensure they do not provide services to shell companies and must identify and verify wallet owners. This includes transactions with institutions and service providers in third countries with lax money laundering regulations.
Anonymous cryptocurrencies, mixers, shell companies, and 'self-hosted' wallets are among the areas the guidelines will address. It is necessary to prohibit the provision and custodial holding of anonymous crypto-asset accounts, as well as accounts that allow anonymization or enhanced obfuscation of transactions, including coins with enhanced anonymity features.
The prohibitions apply only to service providers such as exchanges and not to users or manufacturers of hardware or software wallets or providers of self-hosted wallets. Exchanges and other crypto service providers are not permitted to offer privacy coins or mixers; handling transactions that protect customer privacy could become problematic.
Transparent cryptocurrencies fit well into regulation due to traceable transactions, but privacy coins like Monero, with untraceable transactions, continue to pose challenges for European lawmakers. The establishment of a central supervisory authority (AMLA) could bring some relief for service providers.
By July 10, 2027, AMLA will develop guidelines defining concrete rules for service providers. The regulations are part of a package that includes Regulation 2024/1624, introduced by the European Parliament in mid-2024. The European Crypto Initiative (EUCI) explains that the ban is part of a package of regulations aimed at combating money laundering.
For most users, the new regulations are unlikely to bring about substantial changes, as privacy coins like Monero have already been delisted by most exchanges, and wallet owner identification in accordance with the Travel Rule is already underway. The regulations will apply to third countries as well.
The package aims to prevent the misuse of the financial system for money laundering and terrorist financing, and the new regulations effectively amount to a ban on privacy coins such as Monero (XMR) in the EU.
