Privacy is ‘Constant Battle’ Between Blockchain Stakeholders and State

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Blockchain industry participants and regulators continue battling for privacy rights as the European Union’s sweeping Anti-Money Laundering (AML) rules look set to ban privacy-preserving tokens and anonymous crypto accounts starting in 2027.

Credit institutions, financial institutions and crypto asset service providers (CASPs) will be prohibited from maintaining anonymous accounts or handling privacy-preserving cryptocurrencies under the EU’s new Anti-Money Laundering Regulation (AMLR) that will go into effect in 2027, Cointelegraph reported in May.

Maintaining the right to access privacy-preserving coins like Monero (XMR) has been a “constant battle” between blockchain industry stakeholders and regulators, according to Anja Blaj, an independent legal consultant and policy expert at the European Crypto Initiative.

“Once you think of how the states want to play out their policies, they want to establish control. They want to understand who the parties are that transact among themselves,” said Blaj, speaking during Cointelegraph’s daily live X spaces show on Sept. 3.

“[The state] wants to understand that to be able to prevent whatever crime and scamming is happening, and we want to enforce the policies that we create as a society.”

Her comments came as the EU ramped up its regulatory oversight over the crypto industry, building on the bloc’s Markets in Crypto-Assets Regulation (MiCA).

Related: Swiss banks complete first blockchain-based legally binding payment

Room for negotiation remains

While the AML framework is final, regulatory experts still see potential for negotiation until it rolls out in 2027.

Policymaking is a “continuous conversation,” meaning that “nothing is set in stone, even if the regulation is already out,” said Blaj. “There are still ways to either talk to the regulators, see how it’s going to play out, how it’s going to be enforced.”

While there’s always room for negotiations with policymakers, the regulation concerning privacy-preserving cryptocurrencies and accounts is becoming “more stringent because it is not serving the interests and the planning of the states,” she added.

Related: Bitcoin whale awakens after 12 years, transfers 1,000 BTC before US Fed meeting

The push against crypto privacy comes as a separate EU proposal, known as “Chat Control,” regains momentum.

Source: Flight Chat Control / Cointelegraph

The plan would require platforms such as WhatsApp and Telegram to scan every message, photo and video sent by users, even those protected with end-to-end encryption.

Fifteen member states back the bill, but their support does not yet represent 65% of the EU population — the threshold needed for adoption. Germany has been hesitant, but a policy shift could prove decisive.