The European Union continues its work on regulating the cryptocurrency market. The problem is that it accepts more and more stringent standards for preventing money laundering – from July 1, 2027, it is to prohibit the use of private coins and the implementation of anonymous operations related to digital assets.
Private coins
Private Coin (English Privacy Coins) are cryptocurrencies designed to ensure maximum privacy and anonymity of transactions. Unlike typical cryptocurrencies, such as Bitcoin, where all transactions are publicly available in blockchain and tracking, private coins use advanced cryptographic techniques to hide:
- the sender’s identity,
- the identity of the recipient,
- transaction amount.
The most popular private coins are Monero (XMR), ZCash (ZEC) and Dash (Dash).
What are they used for?
Private Coins can be used legally, e.g. to protect financial privacy in countries with a repressive system. Unfortunately, due to anonymity, they are also used for illegal actions, which arouses the interest of regulators and leads to their delisting on some stock exchanges.
The European Union wants to prohibit the private coins
The European Union (EU) will infect the use of anonymous cryptocurrency accounts and private coins from 2027. It will tighten certain regulations regarding privacy. Cryptocurrency service providers (CASP), including stock exchanges and financial institutions, will have to collect all possible Customer identification data (KYC) regarding all users. Otherwise they will have to stop offering their services in the EU. In practice, this is the end of anonymity in the blockchain industry. At least in the EU.
All ideas were included in the document published by the European Crypto Initiative (EUCI). We read in it:
Article 79 AMLR establishes strict bans on anonymous accounts (…). Credit institutions, financial institutions and cryptoactic service providers are prohibited to maintain anonymous accounts.
Everything is clearly explained: it is a fight with money laundering. It’s just that it is worth emphasizing again: private coins simply guarantee the privacy of the transmission of funds. Not every private coin user is a criminal!
Finally, it is worth adding that EU plans are not only about the cryptocurrency market: Anonymous bank accounts, savings books and deposit caches will also be prohibited.
