Indeed, the European Commission selects Iota’s Web3 ID for its European Blockchain Sandbox (EBSI) initiative. This choice highlights the potential of this technology to transform “Know Your Customer” (KYC) processes.
This solution relies on distributed ledger technology (DLT) as well as large-scale tokenization. Iota’s Web3 ID technology is developed in collaboration with Walt.id, IDnow, Bloom Wallet, and HAVN.
It aims to reform the traditional method of implementing KYC processes, which is often hampered by inefficiencies, high costs, and privacy issues.
Towards a revolution in KYC processes in a Web3 environment
The idea is to establish a reusable KYC system via DLT and tokenization. The goal is to improve both security and user control over their personal data.
The process begins with remote identification performed by IDnow. This guarantees the user’s compliance with European anti-money laundering (AML) and KYC regulations.
Once the identity is verified, it is tokenized and stored in the user’s wallet. This record is made in the form of a “soulbound” token. It can be used in various Web3 applications to verify identity without exposing personal information.
A digital identity based on blockchain
This choice by the European Commission comes as the EU actively strives to implement a digital identity system.
On May 21, the institution updated its regulation on European digital identity. The initial publication was in February 2023, with full implementation requirements by 2026.
Moreover, this regulation requires Member States to provide all citizens and residents with at least one EU digital identity wallet.
This wallet accommodates electronic signatures and document storage, ranging from university diplomas to train tickets. It is considered the next step in how European citizens will live and work in the future.
The selection of Iota by the EBSI marks an important milestone for the adoption of digital identity solutions based on blockchain.
Indeed, this partnership paves the way for regulatory discussions on KYC and privacy in a Web3 environment.
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