Why the EU Bans or Regulates Some Cryptocurrencies
1. Anti-Money Laundering (AML) Concerns
Cryptocurrencies can be used for illicit money transfers and money laundering.
The EU wants to ensure all crypto-related businesses comply with KYC (Know Your Customer) and AML regulations to prevent financial crimes.
2. Consumer Protection
Many crypto assets are extremely volatile or tied to scams and rug-pull projects.
The EU aims to protect investors from fraudulent or risky crypto assets by setting strict standards.
3. Financial Stability
Stablecoins and other digital currencies could undermine the Euro or national monetary systems.
The EU wants to avoid systemic risks from unregulated or large-scale crypto usage.
4. MiCA Regulation (Markets in Crypto-Assets) – Enforced from 2024
MiCA is a landmark EU law that brings crypto under strict supervision. It includes:
Mandatory licensing for crypto companies operating in the EU.
Strict rules for stablecoins, including capital reserves and transparency.
Oversight for NFTs and DeFi is expected in future updates.
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Types of Crypto Most Affected
Privacy Coins like Monero (XMR) or Zcash (ZEC):
Banned or restricted because of their anonymous nature, which makes AML compliance difficult.
Unregulated Stablecoins like USDT (Tether):
Can face restrictions if they don’t meet reserve or transparency requirements.
Tokens from Non-KYC Exchanges:
Coins issued on platforms that don’t comply with KYC/AML may be delisted or blocked.
