The European Union will enforce sweeping new anti-money laundering rules in July 2027, banning anonymous crypto wallets and privacy coins in a major crackdown on financial anonymity in the digital asset space.
These regulations forbid crypto-asset service providers (CASPs), including exchanges and custodial wallet services, from providing anonymous accounts and enabling transactions with privacy-enhancing coins like Dash (DASH), Zcash (ZEC), and Monero (XMR).
What Will The New Rules Include?
The AMLR requires CASPs to follow strict Know Your Customer (KYC) protocols, which include gathering and confirming the names of customers for transactions above €1,000.
CASPs must also take precautions against risk when dealing with self-hosted wallets, such as confirming the wallet owner’s identity when money is moved to or from their platforms.
It is crucial to remember that neither self-custody wallets nor peer-to-peer transactions between them are prohibited by the AMLR.
The rules expressly address CASPs and their responsibilities with regard to transaction monitoring and customer due diligence.
Market Critics View New Law as Rather Unjust
The law has generated discussion among privacy activists and the crypto community.
The regulations, according to critics, violate financial privacy and may make it more difficult to utilize cryptocurrencies for justifiable goals like making anonymous gifts or preserving individual financial independence.
Patrick Breyer, a German member of the European Parliament, has been an outspoken opponent, arguing that the right to conduct business anonymously is an essential one.
Crypto Service Providers Face Major Overhaul Under EU’s New AML Rules
CASPs will need to modify their activities to conform to the new regulatory environment even though the AMLR intends to support EU efforts to combat money laundering and terrorist financing.
With representatives from every member state, the EU’s Anti-Money Laundering Authority (AMLA) will begin a selection process on July 1, 2027, to directly oversee 40 significant financial or cryptocurrency businesses.
AMLA will use certain “materiality thresholds” to decide whether companies are eligible for direct supervision.
Companies must have a substantial cross-border presence in order to qualify, either by processing more than €50 million (about $56 million) in transactions or by serving at least 20,000 clients in a host nation.
Through focused, centralized oversight, the objective is to strengthen the EU’s capacity to fight financial crime by concentrating regulatory attention on organizations with significant operations and possible money laundering threats.