Goodbye to Privacy Coins Like Monero and Zcash

Under the upcoming Anti-Money Laundering Regulation (AMLR), banks, financial institutions, and crypto asset service providers (CASPs) will no longer be allowed to maintain anonymous accounts or handle privacy coins. The regulation specifically targets cryptocurrencies such as Monero and Zcash, which are built around privacy.

Article 79 of AMLR explicitly bans anonymous accounts. And it doesn’t just apply to crypto; anonymous bank accounts, payment accounts, digital wallets, and safety deposit boxes are also included under this restriction.

EU’s Regulatory Structure Finalized, Details on Implementation Coming Soon

The EU’s new AML framework consists of AMLR, AMLD, and AMLAR regulations. While the main structure is largely finalized, the implementation specifics are still being developed. These will mostly be shaped by secondary legislation — implementing and delegated acts — coordinated by the European Banking Authority (EBA).

According to Vyara Savova from the European Crypto Initiative, public input is still being gathered during this phase. She emphasized that centralized crypto projects, especially CASPs regulated under MiCA, should already begin adapting their processes in line with this framework.

Stricter Oversight for CASPs: 6-Country Requirement and 2027 Launch

The new regulatory approach will focus on crypto service providers operating in six or more EU member states. These firms will be subject to direct supervision by AMLA, a new authority to be established for combating money laundering.

Initially, 40 crypto firms will be selected — at least one from each EU country. The selection process starts on July 1, 2027. Key criteria for selection include having over 20,000 local users or more than €50 million in transaction volume.

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This data, reported by local outlet El Mundo using figures from the Central Reserve Bank of El Salvador, indicates that most registered providers have failed to meet regulatory requirements under the nation’s Bitcoin Law.

Strict Bitcoin Law Leaves Firms Inactive

El Salvador’s regulatory framework for Bitcoin companies includes Anti-Money Laundering (AML) compliance, accurate financial reporting, and a customized cybersecurity program suited to each company’s operations. At least 22 non-operational firms have reportedly failed to comply with the majority of these conditions.

In total, 89% of companies on the official registry have not fulfilled the necessary legal obligations to remain active.

Some Companies Still Compliant with National Standards

Despite the setbacks, a handful of firms, such as the government-supported Chivo Wallet, Crypto Trading & Investment, and Fintech Américas, have managed to meet the compliance criteria and maintain their active status.

Bitcoin’s Role in El Salvador’s Economic Plan Faces Uncertainty

El Salvador adopted Bitcoin as legal tender in 2021, positioning it alongside the US dollar as part of President Nayib Bukele’s bold economic vision. However, recent developments suggest a shift in policy.

The country secured a $1.4 billion loan agreement with the International Monetary Fund (IMF), which includes a provision to scale back Bitcoin initiatives. According to the agreement, taxes must now be paid in US dollars, and public institutions are to limit their use of Bitcoin.

Although the IMF has called on El Salvador to halt public sector Bitcoin acquisitions, President Bukele has asserted that the government will continue to accumulate Bitcoin, casting doubt on the IMF deal’s implications.

Further fueling speculation, a new law altering Bitcoin’s legal tender status is reportedly set to take effect on April 30, raising questions about the future of Bitcoin within El Salvador’s public and private sectors.

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