EU Bans Privacy Coins for Regulated Firms, Exempts Direct Bitcoin Transfers from AML Checks

The European Union has approved sweeping anti-money laundering rules under Regulation (EU) 2024/1624, set to take effect on July 10, 2027, that will prohibit regulated crypto-asset service providers from supporting privacy coins while explicitly leaving direct Bitcoin transfers between self-hosted wallets outside mandatory identity verification. The legislation introduces a bloc-wide €10,000 cash payment cap for commercial transactions and requires full customer due diligence for occasional crypto transfers of €1,000 or more. Providers must also identify customers for smaller transactions. Accounts offering transaction anonymization or obfuscation—often associated with privacy coins—are banned for regulated entities, effectively forcing exchanges and custodians to delist such assets. However, the rules do not ban individual ownership or private use of privacy coins. The regulation also expands anti-money laundering obligations to professional football clubs, luxury goods dealers, and other sectors, while strengthening beneficial ownership transparency with disclosure thresholds as low as 15% for high-risk structures. Bitcoin’s exemption from direct identification for peer-to-peer transfers—provided no regulated intermediary is involved—has been emphasized, with clarification that the Travel Rule framework applies only when regulated providers process transfers. The move signals the EU’s push for greater oversight aimed at balancing innovation with security, potentially attracting institutional capital to compliant assets while marginalizing privacy-focused cryptocurrencies in regulated markets.