The European Union is set to implement a ban on privacy coins and anonymous crypto accounts in 2027, reflecting a global trend of regulators strengthening anti-money laundering (AML) measures. Under 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 on transactions exceeding 1,000 euros. This move aims to curb the flow of illicit funds but may stifle innovation in privacy technologies and force users who rely on anonymity to turn to less regulated areas, 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 a surge in outflows from exchanges. In the long run, although self-custody wallets have not been directly banned, 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 evident: 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 for the crypto industry.