New EU Rules Will Ban Privacy Coins and Anonymous Wallets by 2027

The European Union is taking a definitive step toward tightening oversight of the crypto sector. Under new anti-money laundering regulations set to take effect in 2027, privacy-focused cryptocurrencies and anonymous wallets will be banned across the bloc. The move is part of a broader regulatory effort to reduce financial crime and enhance transparency in digital finance.

This decision, while welcomed by some policymakers and compliance advocates, has sparked concern among privacy proponents and crypto industry participants alike. The regulation signals a shift in the EU’s approach to financial privacy, placing control and traceability above anonymity.

What Coins Will Be Affected?

The core of this regulation targets a specific class of digital assets: privacy coins. These include well-known cryptocurrencies such as Monero (XMR), Zcash (ZEC), and Dash, which offer features designed to obscure transaction details and user identities. Under the new rules, crypto service providers operating within the EU will be prohibited from handling, storing, or facilitating transactions involving these assets.

Anonymous wallets are also affected. The regulation explicitly bans any crypto account or wallet that enables users to transact without verifying their identity. This brings non-custodial wallets and platforms that do not conduct know-your-customer (KYC) procedures into the spotlight.

In effect, that shuts the door on a major portion of DeFi’s ideological foundation: anonymity by default. While technically sophisticated users may still find ways around these rules, compliance-focused platforms will be forced to de-list or geo-block access altogether.

The EU argues that privacy coins make it easy for bad actors to hide illicit transactions, from laundering money to financing underground markets. Whether that’s a fair characterization or not, these tokens are now on borrowed time within EU borders. Once 2027 hits, crypto service providers (CASPs) won’t be allowed to list them, store them, or process transactions involving them.

AMLA Takes Charge of Rule Enforcement

To enforce the new rules, the EU is rolling out a new authority: the Anti-Money Laundering Authority (AMLA). Starting in July 2027, AMLA will directly supervise at least 40 major crypto firms operating across six or more EU countries.

The criteria for supervision are clear. If a platform has more than 20,000 users in any EU state or processes over €50 million annually, it lands in AMLA’s direct line of sight. These thresholds aim to focus attention on large players while still signaling that no one is beyond scrutiny.

And AMLA won’t be operating in a vacuum. Much of the implementation will fall under "level two acts"—interpretive rules and technical guidance—managed by the European Banking Authority. That means we’re likely to see ongoing clarifications and legal fine-tuning over the next two years. According to Vyara Savova from the European Crypto Initiative (EUCI), these interpretive steps are crucial, as the core framework is final, but many operational details still hang in the balance.

It's also worth noting that customer due diligence will become mandatory for all crypto transactions over €1,000. So, even if you're not using a privacy coin, the privacy window is narrowing.

What Does It Mean for Platforms and Users?

The upcoming ban won’t just target privacy tokens—it could impact the entire crypto industry in Europe. Centralized exchanges and regulated wallets will likely start removing these coins well before the 2027 deadline. Some already have, while others are waiting to see how the rules get enforced.

As privacy coins disappear from major platforms in Europe, trading volumes and liquidity are expected to drop fast. That could push users toward decentralized options, offshore services, or wallets where they control their own funds. It’s unclear if regulators expected this or if it’s just a side effect.

Ironically, privacy coins were designed to offer protection against financial surveillance, not to help criminals. But regulators no longer seem interested in that difference.

For developers in the privacy space, this isn’t just a small change—it’s a major challenge. They’ll have to choose between adapting, leaving the European market, or continuing in uncertain legal territory.

New Rules for Crypto in Europe

The EU's move to ban privacy coins and anonymous wallets marks a major shift in how digital assets are regulated. This decision prioritizes anti-crime efforts over privacy, and while some see it as a positive step, others are concerned about the loss of personal privacy.

The full impact of this regulation will take a couple of years to become clear, as businesses work to meet the new standards. Some of the details are still being discussed, with groups like the EUCI providing input on how to make the rules work without harming innovation.

The landscape of European crypto is about to change, and the big question is whether other countries will follow suit.