Revolutionizing Crypto Compliance: IDnow Leads Consortium for EU Regulations
MUNICH -15/02/2024 – (SeaPRwire) – In a concerted effort to navigate the intricate landscape of European regulatory compliance in the crypto asset realm, IDnow, a prominent identity verification platform provider in Europe, has joined forces with a consortium comprising five esteemed partners: the IOTA Foundation, walt.id, SPYCE.5, and Bloom Labs. Together, they aim to address the stringent requirements laid out in the European Anti-Money-Laundering Regulation and the Transfer of Funds Regulation (TFR), specifically targeting Crypto Asset Service Providers (CASPs) and self-hosted wallets.
The recent implementation of the TFR regulation within the EU mandates the inclusion of identifying data for both senders and receivers in all cryptocurrency transactions. Under this new rule, compliance with TFR becomes obligatory for all CASPs, aligning them with similar Anti-Money-Laundering (AML) regulations applicable to traditional financial institutions. Consequently, CASPs are compelled to undertake an identification process during user onboarding and wallet registration to adhere to the AML Regulation and TFR.
One of the primary hurdles faced by CASPs in meeting these new regulatory standards is ensuring compliance with the General Data Protection Regulation (GDPR), which prohibits the storage of personal identifiable information (PII) on blockchains or Distributed Ledger Technologies (DLT). However, despite this restriction, CASPs must possess comprehensive knowledge of their clientele and continually verify this information to fulfill regulatory obligations.
To surmount this challenge, the consortium has devised a pioneering system whereby a trusted entity tokenizes the identification process it has observed. This process results in the creation of soul-bound tokens (SBTs), which allow CASPs to confidently engage in identification processes without divulging any PII. These SBTs can then be utilized for blockchain operations, facilitating web3 native interactions. Moreover, the trusted entity retains the capability to disclose identity information upon request by authorized entities such as law enforcement, as well as to revoke SBTs if necessary.
Within this collaborative endeavor, each partner plays a vital role in realizing the proposed solution. The IOTA Foundation, renowned for its support of the IOTA protocol’s development, will provide the foundational network, which will be implemented on an Ethereum Virtual Machine (EVM)-compatible IOTA Smart Contract Chain. walt.id will leverage its expertise in decentralized identity and wallet infrastructure to develop and maintain the trusted witness service responsible for generating and verifying SBTs. IDnow will contribute its identity verification solution to facilitate user onboarding into the wallet solution, while Bloom Labs will furnish the necessary capabilities for users to store, present, and prove ownership of SBTs. SPYCE.5’s specialization in hybrid blockchain technologies will ensure seamless interchain communication and transaction validation, bolstering the system’s overall efficiency and regulatory compliance.
In expressing their commitment to this collaborative initiative, representatives from each consortium member shared their perspectives on the endeavor’s significance. Rayissa Armata, Director of Global Regulatory and Government Affairs at IDnow, underscored the consortium’s role in addressing pressing regulatory challenges faced by crypto wallet solutions in Europe. Dominik Schiener, Chairman of the IOTA Foundation, emphasized the need for user-friendly solutions that uphold privacy and security amidst evolving regulatory landscapes. Dominik Beron, Founder of walt.id, highlighted the project’s innovative approach to onboarding and verifying users for crypto and DeFi use cases. Nicole O’Brien, Co-founder of Bloom Labs, expressed excitement about the project’s potential to ensure compliance with EU regulations. Finally, Holger Köther, Managing Director of SPYCE.5, commended the consortium’s pioneering efforts in navigating the complex realm of EU regulations.
Press contact IDnow
Katherina Riesner
+49 89 41324 6030
SOURCE IDnow
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