The European Union is considering a ban on privacy coins, such as Monero (XMR), Zcash (ZEC), and Dash (DASH), as part of its anti-money laundering (AML) efforts.
The ban would prohibit banks, financial institutions, and crypto asset service providers from dealing with coins that enhance anonymity.
The proposal project, initially reported by CoinDesk, suggests that the ban aims to prevent money laundering and increase transparency in the crypto space.
The Markets in Crypto-Assets Regulation (MiCA) and the Anti-Money Laundering Regulation (AMLR) are expected to form a comprehensive regulatory framework for cryptocurrencies in the EU.
These regulations would also include restrictions on self-custody wallets and cryptocurrency mixers, which are tools used to increase anonymity in cryptocurrency transactions.
Cryptocurrency exchanges operating in the EU have already begun delisting privacy coins in anticipation of the ban.
For example, Binance delisted Monero earlier this year, and Kraken will stop supporting privacy coins in Ireland and Belgium.
The proposed ban reflects a broader trend of increased regulatory scrutiny on privacy coins and anonymity-enhancing tools in the cryptocurrency industry.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is also targeting privacy coins like Tornado Cash, imposing sanctions on the mixing service for its alleged role in facilitating ransomware payments and other illicit activities.
The final details of the ban are still under negotiation, but it is expected to come into effect in the near future, potentially by 2026 or 2027.
Monero (XMR): A privacy-focused cryptocurrency that uses RingCT and Ring signatures to obscure the amounts and origins of transactions.
Zcash (ZEC): Another privacy coin that employs zk-SNARKs to provide optional transaction privacy.
Dash (DASH): A cryptocurrency focused on privacy that offers PrivateSend, a feature that mixes transactions to enhance anonymity.
The ban on privacy coins is part of a broader package of anti-money laundering regulations that would also include new limits on cash transactions and increased due diligence requirements for cryptocurrency service providers.
