Key Details of the EU Privacy Coin Ban and impact to the market
➡️Regulatory Framework
Legislation: The AMLR, part of a broader EU anti-money laundering (AML) package, includes Article 79, which prohibits credit institutions, financial institutions, and crypto-asset service providers (CASPs) from maintaining anonymous accounts or handling anonymity-enhancing coins (privacy coins).
➡️Scope:
Privacy Coins: Bans coins use technologies (e.g., ring signatures, zero-knowledge proofs) to obfuscate transaction data.
➡️KYC Requirements: Mandates full Know Your Customer (KYC) checks for all crypto users, with identity verification for transactions over €1,000 ($1,100).
➡️Enforcement: The Anti-Money Laundering Authority (AMLA), a new EU agency, will oversee compliance, targeting ~40 major CASPs operating in at least six member states with over 20,000 users or €50 million in annual transactions.
➡️Timeline and Implementation
Effective Date: July 1, 2027, with implementation details finalized via implementing and delegated acts by the European Banking Authority (EBA).
➡️Rationale
AML and CFT: The EU aims to prevent crypto from facilitating money laundering, terrorist financing, and ransomware payments, citing privacy coins’ appeal to cybercriminals.
Public Ledger Concerns: Unlike Bitcoin’s pseudonymous blockchain, privacy coins’ obscured ledgers hinder law enforcement, prompting stricter rules
➡️Impact on Crypto Market
Privacy Coins:
Delistings: Exchanges like Binance, Coinbase, and Kraken in the EU must delist privacy coins by 2027, reducing liquidity and trading volume.
Price Volatility: a 5.1% drop in monero, with Monero’s transaction count up 18% (12,300 in 24 hours), signaling panic selling.
HODLing: Glassnode data shows a 15% increase in Monero wallet transfers to cold storage, indicating some investors are holding despite sell-offs.
