The EU's upcoming ban on privacy coins and anonymous crypto accounts, set to be implemented in 2027, reflects the global trend of regulators strengthening anti-money laundering (AML) measures. According to the Anti-Money Laundering Regulation (AMLR), financial institutions and crypto service providers will be prohibited from processing privacy coins such as Monero (XMR) and Zcash (ZEC), and will be required to perform mandatory identity verification for transactions exceeding 1,000 euros. This move aims to curb illegal fund flows but may squeeze the innovative space for privacy technologies and force users who rely on anonymity to turn to more lenient regulatory environments, such as Dubai.

In the short term, the privacy coin market has seen panic selling, with XMR and ZEC prices dropping over 7% and 5%, respectively, and an increase in outflows from exchanges. In the long term, although self-custody wallets are not directly prohibited, their anonymity features will be restricted, and tools like mixers may also be assessed as high risk. The 'double-edged sword' effect of regulation is highlighted: on one hand, it enhances compliance, while on the other, it may drive the iteration of decentralized technologies and even give rise to more covert transaction methods. The balance between privacy and compliance remains a core challenge in the crypto industry.