EU Tracking Crypto Transfers Based on New AML Rules: Eurogroup President

According to comments made by Eurogloup President Paschal Donohoe, the European Union plans to track cryptocurrency transfers.

Speaking yesterday at the 2025 European Anti-Financial Crimes Summit, Donohoe, also Ireland’s finance minister, discussed how the EU is working to apply long-standing AML regulations to crypto.

Specifically, the Eurogroup president explained that the EU “applies to crypto asset service providers because it records sender and recipient data (yes).”

According to Donohoe, such an expansion of AML regulations is “essential,” adding that the EU would like to move such regulations “beyond the more traditional forms of fiscal transfers” and allow for “transparency in the transfer of crypto assets.”

His remarks come in the context of the EU’s deployment of the new Money Laundering Regulation (AMLR) that will prohibit cryptocurrency service providers from July 1, 2027 to talk to anonymous wallets and privacy coins.

The new regulations also require exchanges and other centralized entities (such as custody wallets) to identify users of self-hosted wallets that use the service.

Therefore, we create conditions that allow EU institutions to track and identify cryptocurrency transactions that go through registered providers operated by the union.

As the European Cryptography Initiative explains in the AMLR summary, the following rules provide that EU member states must “ensure direct, immediate, and unfiltered access to encrypted account data” to such institutions, such as the Financial Intelligence Unit and the EU-wide anti-moneying authorities.

EU “getting in the way” code check

For many within the cryptocurrency industry, such provisions are “biased towards surveillance.” Monero Developer Riccardo Spagni said Decryption.

As one of the key figures behind privacy coins, Spagni claimed that AMLR would introduce a “anonymously enhanced” blanket ban on cryptocurrency.

“From July 1, 2027, EU wind exchanges and custodians will be banned from processing privacy coins such as Monero,” he said. “This goes far beyond the risk-based approach that typically applies to cash, prepaid cards, or end-to-end encrypted messages.”

Spagni also points out that the new regulations require “intrusive checks” of self-recruited wallets and transfers of more than 1,000 euros between the service provider and self-approved wallets that require service providers to perform verifications.

The developer also argued that there was no evidence that the new regulations would significantly reduce crime.

“Criminals can edit Monero’s open source code and trade via peer-to-peer or offshore venues,” he said. “What the rules actually do is for law-abiding Europeans to strip digital cache equivalents that protect data harvesters, stalkers, or commercial spy spies.”

Perhaps more stubbornly, Spagni also pointed to the inconsistencies between the AMLR and Articles 7 and 8 of the EU Charter, ensuring privacy and data protection.

For this reason, he suggests that “legal challenges are almost inevitable” and a better compromise is to reflect existing rules of cash, meaning privacy coins are allowed to reach reasonable ceilings.

Other industry participants are also wary of the new rules, reported Unity Wallet COO James Toledano. Decryption It also warns that while he supports “AML at the time of swapping or at the time of ramping or off-ramping”, the “defi spirit” is at risk of being corrupted or hampered by regulations.

“These rules are consistent with traditional banking standards, but are not suitable for Crypto’s decentralized structure,” he said. “And they can easily be avoided as independent cryptography is truly global and owners find other ways to cash in on chips.”

In Toledano’s view, regulations are likely to have a significant impact on regular users and developers, and could be to push parts of the cryptocurrency economy into “less transparent channels such as black and dark markets.”

And Spagni argued that impending rules could lead to a shrinking EU cryptocurrency ecosystem.

“We’re already seeing preemptive abolition,” he said. “European traders are increasingly dependent on decentralized exchanges, atomic swaps and peer-to-peer markets that are outside of the EU license.”

Privacy Tech Flight

At the same time, Spagni suspects that Privacy‑ Tech startups, crypto oversight and wallet providers will move to jurisdictions that view privacy as a function rather than a bug.

Meanwhile, AMLRs could potentially be a catalyst for technological advancements, despite mostly being located outside the EU.

Spagni predicted “acceleration of user-friendly layer 2 bridges, threshold signature schemes, and proof-based KYC proofs for zero knowledge, aimed at restoring privacy without touching Fiat On -Ramps.”

Edited by Sebastian Sinclair and Stephen Graves