The European Union is moving toward banning privacy coins under new anti-money laundering regulations.
Restrictions
This legislation prohibits crypto asset service providers from supporting privacy-enhancing coins such as Monero (XMR), Zcash (ZEC), and Dash, citing concerns over their untraceability and potential for illicit use.
The restrictions will prevent trading, custody, or listing of these coins on regulated platforms. Consequences include delisting from major European exchanges, reduced liquidity, and potential devaluation.
Privacy coin developers and holders face uncertainty, and projects may shift operations outside the EU. This marks a significant regulatory stance against financial anonymity in the crypto space.
Parties affected
The EU privacy coin ban will affect several groups
1. Users: Individuals who use privacy coins for legitimate reasons (e.g., financial privacy) will lose access via EU-based exchanges and wallets.
2. Exchanges: Crypto asset service providers (CASPs) like Kraken and Bitstamp in the EU must delist privacy coins or face penalties.
3. Developers: Teams behind Monero, Zcash, and similar projects may lose access to a significant market and funding sources.
4. Investors: Holders of privacy coins in the EU could see price drops and limited exit options.
5. Businesses: Firms accepting privacy coins as payment must seek alternatives.
Key Deadlines
EU member states must implement the privacy coin ban as part of the Markets in Crypto-Assets Regulation (MiCA) and the Anti-Money Laundering Regulation (AMLR). Here's the timeline:
June 2023: MiCA published in the Official Journal of the EU.
June 2024: Core stablecoin provisions (notably disclosures and reserve requirements) become active—privacy‑coin ban clauses are part of the full MiCA framework.
30 December 2024: MiCA enters into full effect, formally prohibiting regulated CASPs from listing, custody‑servicing, or trading privacy coins.
Mid‑2025 (projected): AMLR—containing more specific anti‑money‑laundering rules for privacy coins—is adopted and published.
December 2026: Deadline for all 27 member states to transpose AMLR into national law (18‑month transposition period).
