Launched in 2023, the European Blockchain Sandbox for innovative DLT use cases is an initiative by the European Commission. Every year, no more than 20 projects are selected to take part. The sandbox provides a controlled environment for testing and validating innovative DLT solutions while engaging closely with regulators from across the EU.
The Web3 Identification Solution built by the IOTA Foundation, walt.id, IDnow, Bloom Wallet, and HAVN, has participated in European Blockchain Sandbox. The solution tokenizes all kinds of identification processes, enabling users to verify their identity in Web3 environments while maintaining control over their personal information.
As outlined in this blog post, the solution provides a seamless experience for Web3 identification. First, the user goes through a remote identification process with IDnow, in compliance with EU Anti-Money Laundering (AML) and KYC requirements. This process is then tokenized by walt.id and stored in the user’s Bloom wallet as a soulbound token.
The token can then be recognized by Web3 dApps and other services to confirm that the user has been identified, without revealing personal information. It can be reused in multiple identification processes and, if requested by an authorized party, the identity information can be revealed and the token can also be revoked. Additionally, the identity information can be issued in the W3C Verifiable Credential format for permissionless sharing in off-chain use cases.
This solution opens the door to regulatory discussions in EU about KYC and privacy in a Web3 environment. This is especially relevant now that many regulators are considering their approach to decentralized finance (DeFi).
submitted by /u/mislav_
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