Monero and Zcash hold steady despite EU's plan to ban privacy tokens by 2027

• The European Union announced it will close its doors to privacy-focused cryptocurrencies and anonymous tokens.
• This stems from its new anti-money laundering regulations set to take effect in 2027.
• The privacy token sector maintained gains, with top cryptocurrencies Monero and Zcash rising 5% and 3% on Friday.

Monero (XMR) and Zcash (ZEC) saw a 5% and 3% gain, respectively, on Friday despite the European Union (EU) indicating plans to ban privacy tokens in its new anti-money laundering regulations (AMLR), set to take effect by 2027.

Privacy sector maintains gains amid changing EU policy

The EU is set to begin prohibiting crypto businesses from engaging with privacy-focused cryptocurrencies starting in 2027 as part of its new AMLR framework, according to an AML Handbook released by the European Crypto Initiative (EUCI).

The ban will also affect anonymous account holders and self-custody addresses running on credit institutions, financial institutions and crypto-asset service providers — including crypto exchanges — beginning from July 2027.

"Anonymous crypto-asset accounts and other anonymizing instruments hinder the traceability of transactions, complicating the detection of suspicious activity and the application of effective customer due diligence measures," EUCI stated in the Handbook.

Much like the Markets in Crypto Assets (MiCA) laws, the AMLR outlines when and how companies must apply Customer Due Diligence (CDD) to counter money laundering and terrorism financing, with guidance for financial and crypto-asset service providers.

"To ensure the robust application of AML/CFT requirements, crypto-asset service providers should be prohibited from offering or maintaining anonymous crypto-asset accounts or any mechanism that enables enhanced obfuscation of transactions, including through anonymity-enhancing coins," the Handbook added.

The crypto asset providers eligible for direct AML supervision must operate in at least six EU member states. The Anti-money Laundering Authority (AMLA) will initially select up to 40 high-risk, cross-border entities by July 2027, with at least one per member state.

To guide this process, the AMLA will adopt Regulatory Technical Standards (RTS), with thresholds — such as 20,000 customers or €50 million in transactions per host member State — to ensure only firms with significant cross-border activity are supervised.

The privacy token category held steady despite the EU's latest plan, rising 3% in the past 24 hours. Top privacy tokens Monero and ZCash are up 5% and 3% in the past 24 hours.

This comes after Monero soared on Monday following reports of hackers converting about $330 million in stolen Bitcoin tokens to XMR. As a result, XMR's price spiked 50%, rising to $317 briefly before declining under $300. On-chain investigator ZachXBT first flagged the suspicious transfer involving 3,500 BTC.