Patrick Hansen, Circle's Director of EU Strategy and Policy, has reiterated that the European Union's Anti-Money Laundering Regulation (AMLR) does not prohibit self-custody wallets or peer-to-peer cryptocurrency transactions. This clarification addresses persistent misinformation circulating within the cryptocurrency community.
The renewed confusion arises as the AMLR is anticipated to be implemented around the summer of 2027. Hansen's intervention follows a similar effort in March 2024, when he debunked reports that incorrectly claimed the EU was banning anonymous crypto wallets.
"Again, a bunch of big crypto accounts are claiming upcoming AML rules will ban self-custody or anonymous crypto & Bitcoin transactions in the EU. That's wrong," Hansen stated, targeting misconceptions that have proliferated across cryptocurrency forums and news outlets.
The misunderstanding stems from misinterpretations of the broad anti-money laundering framework designed to combat financial crime and terrorist financing across the EU's 27 member states. According to Hansen's detailed explanations, the AMLR's requirements apply solely to crypto-asset service providers (CASPs) such as exchanges, brokers, and custodial wallet platforms, not to individuals utilizing self-custody solutions.
"The AMLR is not a crypto regulation," Hansen clarified in March 2024. "It is a broad anti-money laundering/counter-terrorist financing framework that applies to institutions classified as 'obliged entities.'"
The regulation explicitly excludes providers of hardware and software wallets, like Ledger and MetaMask, that do not possess access to or control over users' crypto assets. Peer-to-peer transfers between individuals are unaffected, preserving the decentralized principles that initially attracted many to cryptocurrency.
What the AMLR Actually Mandates
Contrary to widespread panic, the AMLR reinforces existing practices rather than introducing sweeping new restrictions. The framework mandates that CASPs, which include centralized exchanges and custodial services regulated under the Markets in Crypto-Assets (MiCA) legislation, adhere to standard know-your-customer and anti-money laundering procedures.
These obligations are not new. All crypto exchanges and custodial wallet providers operating within the EU are already subject to similar requirements established by the Fifth Anti-Money Laundering Directive (AMLD5). The AMLR consolidates and updates these rules into a unified framework.
Article 58 of the AMLR specifically prohibits CASPs from offering anonymous accounts, meaning custodial crypto businesses cannot serve anonymous users. However, as Hansen emphasized, "This is already prohibited under existing AML rules anyway, so nothing new."
The regulation does impose a €10,000 cap on physical cash payments, though individual member states have the discretion to set stricter limits. Furthermore, privacy coins such as Monero and Zcash will be banned from regulated platforms once the AMLR fully takes effect in July 2027. This restriction, however, applies only to CASPs, not to individual users.
Advocacy Softened Earlier Proposals
Hansen attributed sustained industry engagement to ensuring that the final AMLR text represented a significant improvement over its initial drafts. Early proposals contained much more restrictive measures that could have severely curtailed cryptocurrency innovation in Europe.
Earlier versions suggested limiting merchant payments from self-custody wallets to just €1,000. The European Parliament had also initially proposed extending AMLR compliance obligations to decentralized autonomous organizations (DAOs), decentralized finance (DeFi) protocols, NFT platforms, and even individual developers—measures that were ultimately excluded from the final legislation.
Hansen assessed that "Education and advocacy efforts" were crucial in achieving a balanced outcome that safeguards Europe's innovation potential while maintaining necessary regulatory safeguards. The collaborative approach between industry stakeholders and regulators successfully averted what could have been a significant setback for European cryptocurrency development.
"The impact on self-custody wallets and CASPs is very limited, almost zero," Hansen explained, emphasizing that the final regulation's effect on the broader crypto market is "extremely limited."
Parallel Challenge: MiCA-PSD2 Dual Licensing Conflict
Alongside clarifying AMLR misconceptions, Hansen has also highlighted a separate regulatory issue that could impede the adoption of euro stablecoins. In late October 2025, he warned that overlapping requirements between MiCA and the Payment Services Directive 2 (PSD2) might compel stablecoin firms to obtain dual licenses for identical activities starting in March 2026.
The European Banking Authority confirmed in June 2025 that stablecoin custody and transfer services fall under PSD2's scope, even though they are already covered by MiCA licensing. This interpretation would necessitate companies acquiring both a MiCA crypto-asset service provider license and a separate payment institution license. This could potentially double compliance costs, requiring approximately €250,000 in capital requirements, in addition to further supervisory fees.
"Under current EBA guidance, businesses using e-money tokens could soon face dual licensing requirements: a MiCA CASP licence, and a PSD2 payment licence for the same custody or transfer activity - starting March 2026," Hansen stated on social media. "That means regulatory duplication for firms handling stablecoin services."
Hansen described the situation as a potential "regulatory own goal" that runs counter to the EU's stated objectives of proportionality and legal clarity. Circle CEO Jeremy Allaire echoed these concerns, calling it a "critical moment for regulatory simplicity" in Europe's stablecoin market.
Industry stakeholders have urged EU lawmakers to extend the transition period to at least 2027 and to amend the forthcoming Payment Services Directive 3 (PSD3) legislation to eliminate the regulatory overlap. Without these adjustments, crypto-asset service providers might withdraw from euro stablecoin custody and transfer services, potentially slowing adoption and directing users toward unbacked crypto assets.
Implementation Timeline and Market Impact
The AMLR requires final approval in the European Parliament before its application, which is set to commence three years after its publication, targeting a summer 2027 implementation date. During this transition period, a new supervisory body, the Anti-Money Laundering Authority (AMLA), will prepare to oversee up to 40 major CASPs operating across at least six EU member states.
The criteria for direct AMLA supervision include firms managing over 20,000 accounts or processing more than €50 million in annual transactions, ensuring that only entities with significant cross-border operations face enhanced scrutiny.
For European cryptocurrency users, the practical implications remain minimal. Individuals can continue to use self-custody wallets freely, transfer cryptocurrency peer-to-peer without restriction, and maintain full control over their private keys. The regulation directs enforcement efforts towards intermediaries—exchanges, brokers, and custodial services—rather than end-users who manage their own crypto assets.
However, Hansen cautioned that misinformation campaigns can distort public discourse and potentially hinder productive dialogue between the industry and regulators. "Crypto Twitter and even some media continue to misread EU policy," he noted. "It's vital to stick to the facts."
This distinction is highly significant as European cryptocurrency markets mature under comprehensive regulatory frameworks like MiCA, AMLR, and related directives. Collectively, these regulations position the EU as having among the strictest stablecoin regulations globally, exceeding requirements in the United States or the United Kingdom, according to a 2025 study published in the Journal of International Economic Law.
As implementation dates draw nearer, Hansen's clarifications underscore that effective regulation depends on accuracy, proportionality, and continuous stakeholder engagement. The evolution of the AMLR from overly restrictive initial drafts to a more balanced final text demonstrates the importance of advocacy—provided it is grounded in factual understanding rather than fear-driven speculation.
For the present time, European cryptocurrency users can remain assured that their right to self-custody is protected, even as the regulatory landscape for professional service providers continues to evolve towards enhanced transparency and accountability.