Here is the most important part:
Secondly, it should be clarified that this Regulation applies also to transfers from or to crypto-asset wallets based on a software or hardware not hosted by a third party, known as ‘unhosted wallets’, provided that a crypto-asset service provider or another obliged entity is involved.
So any and all transfers which involve a "crypto-asset service provider" require full KYC and reporting to the authorities. So what's a "crypto-asset service provider"? See below:
(8) ‘crypto-asset service provider’ means any person whose occupation or business is the provision of one or more crypto-asset services to third parties on a professional basis;
(9) ‘crypto-asset service’ means any of the services and activities listed below relating to any crypto-asset:
(a) the custody and administration of crypto-assets on behalf of third parties;
(b) the operation of a trading platform for crypto-assets;
(c) the exchange of crypto-assets for fiat currency that is legal tender;
(d) the exchange of crypto-assets for other crypto-assets;
(e) the execution of orders for crypto-assets on behalf of third parties;
(f) placing of crypto-assets;
(g) the reception and transmission of orders for crypto-assets on behalf of third parties
(h) providing advice on crypto-assets
So this involves every custodial wallet, every exchange, every swap service, every payment processor, every casino or sportsbook, basically every crypto service in question. If you so much as touch a third party, then they will be obligated to collect your information and pass it on to your government. The only thing that will remain private is direct transactions between individuals. If a merchant accepts bitcoin directly then (at least for the time being) they can avoid this, but if they use a payment processor then they will be collecting KYC as well as information on the source of your funds for all transactions.