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Eurogroup President Plans to Monitor Cryptocurrency Transactions under Anti-Money Laundering Regulations in EU

EU intentions to trace transactions on crypto-asset service platforms by logging details of senders and receivers, as stated by Paschal Donohoe.

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EU intends to log transaction details between crypto providers and their clients, according to...
EU intends to log transaction details between crypto providers and their clients, according to Paschal Donohoe.

Eurogroup President Plans to Monitor Cryptocurrency Transactions under Anti-Money Laundering Regulations in EU

Unveiling the EU's Crypto Crackdown: Tracking Your Digital Assets

Sound the Alarm, EU's Diving Deep into Crypto TransfersIn a shocking revelation, the European Union plans to dive headfirst into your cryptocurrency transactions - yep, you read that right! As reported by the European Anti-Financial Crime Summit 2025, Eurogroup President Paschal Donohoe hinted at tracking the bare bones of your crypto dealings[1]. Makes you wonder if they've got nothing better to do, right?

Let me break it down for ya. Speaking at this year's shindig, Donohoe, Ireland's Finance Man and Eurogroup boss, talked crypto and AML regulations. Donohoe decided it's time to bring long-standing AML rules to the crypto world[1]. He's eager to record data on theSender and Recipient of your crypto funds, making it all nice and transparent for the ol' Financial Crimes Fighting crew[1].

But it's not just about frolicking in the sunlight, oh no! This newfound transparency is intended to spread well beyond the boring, old-school methods of burdening your bank account. The EU's aiming for "the transparency of crypto asset transfers"[1]. Exciting, I know!

So what exactly does this mean? It means that from July 1, 2027 onwards, cryptocurrency service providers will be banned from handling any anonymity-lovers' dreams (like Monero). Say goodbye to privacy coins because Europe's clamping down hard[1].

But wait, it gets better (or worse, depending on how much you love your privacy)! Those same service providers will now be required to identify users of self-hosted wallets who find themselves needing to use their services. The end result? EU agencies could potentially track every single cryptocurrency transaction happening within the Union[1].

European Crypto Initiative sums up the incoming rules[1]. According to them, EU member states must grant direct, immediate, and unfiltered access to the crypto-asset account data to agencies like Financial Intelligence Units and the EU-wide Anti-Money Laundering Authority[1].

EU's Snooping Strikes a Nerve

For those within the cryptocurrency world, this isn't exactly receiving a warm welcome. Monero developer Riccardo Spagni called it a "lopsided approach towards surveillance"[1]. With Spagni spearheading privacy coin Monero, he argues that the new rules practically outlaw "anonymity-enhanced" cryptocurrencies[1].

"From 1 July 2027, EU-licensed exchanges and custodians will be barred from handling privacy coins like Monero," Spagni said, a swipe that goes beyond the usual risk-based approach taken for cash, prepaid cards, or even encrypted messaging[1].

Additionally, the new regulations will demand "intrusive checks" on self-hosted wallets. Want to send more than €1,000 between a customer account and a self-custodied wallet? Your service provider's required to undertake identity verification[1].

Spagni also questions the rules' effectiveness in combating crime. "Criminals can still compile Monero's open-source code and trade peer-to-peer or through offshore venues," he argued[1]. "What the rules really do is strip law-abiding Europeans of a digital-cash equivalent that protects them from data-harvesting, stalking, or commercial espionage."

Contradicting Charter Rights?

Perhaps even more damning, Spagni points to a contradiction between the AMLR and the EU Charter. The Charter guarantees privacy and data protection, leading him to suggest that "legal challenges are almost inevitable"[1]. Instead, Spagni suggests that a better compromise would mirror existing cash rules, allowing privacy coins up to a reasonable threshold.

Others in the industry share Spagni's concerns. Unity Wallet COO James Toledano admits that while he supports AML at the "point of swapping or on or off-ramping," he also warns that the "ethos of DeFi" could be compromised by these regulations[1].

"While these rules match traditional banking standards, they don't fit well with crypto's decentralized structure," Toledano said[1]. "Furthermore, they can and will be easily circumvented as self-custodial crypto is truly global, and holders will find other ways of cashing out their chips."

According to Toledano, regular users and developers may be hit too hard, leading to parts of the cryptocurrency economy shifting into "less transparent channels such as black or dark markets," similar to crypto's early days[1]. And Spagni predicts that this new regulation could even shrink the EU's cryptocurrency ecosystem[1].

The GreatEscape: A Future of Running Away or Advancing

At the same time, Spagni expects privacy-tech startups, cryptographers, and wallet providers may head for greener pastures. You know, places that see privacy as a feature, not a bug, just like how strong-encryption talent allegedly left the US during the '90s "crypto wars."

However, the AMLR could also turn out to be a catalyst for technological advancement, albeit located mostly outside the EU. Spagni foresees an acceleration in user-friendly Layer-2 bridges, threshold-signature schemes, and zero-knowledge proof-based KYC attestations aimed at restoring privacy without touching fiat on-ramps[1].

Signed off by Sebastian Sinclair and Stephen Graves*

Enrichment Data:The European Union's new Anti-Money Laundering Regulation (AMLR), specifically Regulation (EU) 2024/1624, has significant implications for the cryptocurrency industry.

  1. Expanded Scope of AML Regulations: The AMLR broadens the scope of Anti-Money Laundering (AML) obligations to include crypto-asset service providers. This includes exchanges, custodian wallet providers, and crypto-to-crypto platforms.
  2. Increased Reporting and Monitoring Requirements: The AMLR aims to harmonize AML rules across the EU, which could result in stricter reporting and monitoring requirements for cryptocurrency transactions.
  3. Impact on Privacy Coins: Since privacy coins like Monero are designed to provide greater anonymity, they could be affected due to increased scrutiny and stricter regulatory hurdles under the new regulations.
  4. Regulatory Challenges: With privacy coins becoming more complex, crypto service providers may need to implement more sophisticated monitoring and reporting systems to comply with AML regulations.
  5. AMLA's Role: The European Anti-Money Laundering Authority (AMLA) will play a crucial role in enforcing these new regulations. AMLA, established in June 2024, will have broad normative powers, which could lead to more uniform and stringent AML/CFT standards across the EU.
  6. Potential State Exodus: As a result of the stricter regulations, privacy-focused startups, cryptographers, and wallet providers may relocate to jurisdictions that offer more privacy for their operations.
  7. Tech Advancements: The AMLR could drive technological advancements in the development of privacy-focused solutions, leading to improvements in Layer-2 bridges, threshold-signature schemes, and zero-knowledge proof-based KYC attestations.
  8. The new European Union Anti-Money Laundering Regulation (AMLR) is set to expand the scope of AML obligations to include privacy coin transactions, such as those involving Monero.
  9. Under the AMLR, cryptocurrency service providers will be required to identify users of self-hosted wallets and Verify their identities when transactions exceed €1,000.
  10. With these new regulations, crypto exchanges and custodian wallet providers will be prohibited from handling privacy coins from July 1, 2027 onwards.
  11. The Financial Intelligence Units and the EU-wide Anti-Money Laundering Authority will have direct, immediate, and unfiltered access to crypto-asset account data under the AMLR.
  12. Monero developer Riccardo Spagni views the AMLR as a lopsided approach towards surveillance, essentially outlawing anonymity-enhanced cryptocurrencies.
  13. Spagni concerns lie in a potential contradiction between the AMLR and the EU Charter, which guarantees privacy and data protection.
  14. Other industry members also share Spagni's concerns about the impact of the new regulations on the decentralized structure of the cryptocurrency world, potentially leading to less transparency and even a shrinking of the EU's cryptocurrency ecosystem.
  15. Contributors to the privacy-focused crypto sector, including startups, cryptographers, and wallet providers, may choose to relocate to more privacy-friendly jurisdictions as a result of stricter regulations.
  16. Unity Wallet COO James Toledano supports the AML at the point of swapping or on/off-ramping but warns that the ethos of DeFi could be compromised by these regulations.
  17. Despite the challenges posed by the AMLR, it could also foster technological advancements in the development of privacy-focused solutions such as Layer-2 bridges, threshold-signature schemes, and zero-knowledge proof-based KYC attestations.

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