The European Commission has chosen Iota’s Web3 Identification solution for its European Blockchain Sandbox (EBSI) project.
The move would revolutionize Know Your Customer (KYC) processes through distributed ledger technology (DLT) and tokenization. In a press release today, the EU Commission announced the members of the second batch of EBSI.
Iota’s Web3 ID Solution and Its Impact
This selection highlights the promise of Iota’s Web3 ID solution, developed in collaboration with partners such as Bloom Wallet, IDnow, Walt.id, and HAVN. Iota ID considers this selection a notable achievement for its identification solution, enhancing regulatory discussions around KYC and privacy in Web3.
This breakthrough comes when regulators reevaluate their oversight approach to decentralized finance (DeFi). The EBSI, launched in 2023 by the EU Commission, serves as a testing ground for DLT solutions across various industries.
Each cohort includes up to 20 projects, which receive a controlled environment for testing and validation, including the opportunity to engage directly with regulators from across the EU. Iota’s Web3 ID solution aims to transform traditional KYC processes, often plagued by inefficiencies, high costs, and privacy concerns.
The proposed system leverages DLT and tokenization to create a reusable KYC system with better security and user control over personal data. The process begins with remote identification, which IDnow conducts.
Then, the verified identity is tokenized and stored in the user’s wallet as a soulbound token. Holders can use this token across various Web3 applications for identity verification without revealing personal data.
EU Digital Identity Evolution
This development aligns with the EU’s efforts to utilize a digital ID system. Last month, the commission updated the European Digital Identity (EUDI) regulation with complete implementation requirements for 2026.
The regulation mandates that member states provide at least one EU digital identity wallet to all citizens and residents. One benefit of the digital ID wallet is electronically signing and storing documents, such as university diplomas and train tickets.
Ideas for its creation and implementation include the potential use of zero-knowledge proofs. Globally, the trend toward digital identity solutions is gaining momentum. For instance, the TON blockchain ecosystem recently allocated $5 million worth of Toncoin tokens to encourage users to verify their identity using advanced palm scanning technology.
