The European Commission announced its selection of Iota’s Web3 Identification solution for its current edition of the European Blockchain Sandbox initiative (EBSI).
On June 13, the European Commission announced the selected participants for the second cohort of its EBSI. Among those chosen is Iota, an open-source distributed ledger and cryptocurrency ecosystem.
Iota’s selection highlights its Web3 ID solution, developed in collaboration with Walt.id, IDnow, Bloom Wallet and HAVN.
Iota said that this selection is a significant milestone for its identity solution:
“It opens the door to regulatory discussions about KYC and privacy in a Web3 environment. This is especially relevant now that many regulators are considering their approach to decentralized finance (DeFi).”
The EBSI was launched by the European Commission in 2023 to serve as a testing ground for distributed ledger technology (DLT) solutions across multiple industries.
Each cohort comprises no more than 20 projects, which are then given a controlled environment for testing and validation, along with opportunities to engage directly with regulators from across the European Union.
Sandbox projects
Alongside Iota, selected projects include the RealEstate.Exchange (REX) DigiShares, the documents and business-focused blockchain DoxyChain, the smart contract and blockchain security analysis project Hacken, and the artificial intelligence-centric knowledge infrastructure project Origintrail.
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Iota’s specific Web3 ID solution use case is trying to reform the traditional method of implementing Know Your Customer (KYC) processes, often bogged down by inefficiencies, high costs and privacy concerns.
The solution is to implement a reusable KYC system via DLT and tokenization to enhance both security and user control over personal data.
According to the developer, the process begins with remote identification conducted by IDnow, which ensures user compliance with EU Anti-Money Laundering (AML) and KYC regulations.
Digital ID solutions
In the case of Iota’s Web3 ID solution, the verified identity is tokenized and stored in the user’s wallet as a soulbound token that can be used across various Web3 applications to verify identity without exposing personal information.
This comes as the EU actively seeks to implement a digital ID scheme. On May 21, it updated its European Digital Identity (EUDI) regulation, initially released in February 2023, with full implementation requirements by 2026.
It requires member states to provide at least one EU digital identity wallet to all citizens and residents.
The digital ID wallet is designed for electronically signing and storing documents, ranging from university diplomas to train tickets. It is seen as the next evolution in the way European citizens live and work.
Already, some ideas for its creation and implementation have been discussed, such as the possible use of zero-knowledge proofs.
While not specific to Europe, The Open Network blockchain ecosystem has allocated $5 million of Toncoin (TON) tokens to incentivize users to verify their identity using state-of-the-art palm scanning technology — all of which signals a trend in the industry of finding a solution for digital identity in an increasingly digital world.
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