According to Dr. Jonas Gross, CEO of Hakata, zero-knowledge proofs (ZKPs) could enhance privacy and security in the European Union’s (EU) new digital identity and wallet regulation.
The EU has introduced a new digital identity regulation, requiring member states to provide an EU digital identity wallet to all citizens and residents.
The EU Digital Identity Regulation
On May 21, the EU updated its European Digital Identity (EUDI) regulation, originally released in February 2023, and mandated full implementation by 2026. This regulation aims to transform how European citizens live and work, enabling the use of digital ID wallets for electronically signing and storing documents, from university diplomas to train tickets.
Thierry Breton, the EU commissioner for the internal market, stated that the wallet will “revolutionize the way European citizens and businesses engage with online services by seamlessly integrating convenience, safety, and privacy.”
Investment and Implementation
The European Commission has invested 46 million euros ($50 million) in four large-scale pilots to test the EU Digital Identity Wallet. Additionally, a second call for large-scale pilots has been announced to support the deployment of these wallets.
Challenges and Solutions
This development raises questions about the design and functionality of government-issued digital ID wallets, as well as how to maintain individual privacy and regulatory compliance on such a large scale.
Dr. Jonas Gross, CEO of Hakata, a company providing “compliant privacy” solutions for Web2 and Web3 businesses through the Mina Protocol, discussed these challenges.
Key Principles for Digital Identity Solutions
Dr. Gross emphasized two key principles for digital identity solutions, especially the EU digital identity: user-centric design and a privacy-first approach. He stated:
“It needs to be ensured that the user is always at the center and maintains ownership of their confidential, personal data. User data, such as identity data, credentials, attestations, or personal information, should be stored on the user’s device.”
He stressed that users should have the freedom to decide which data to share and with whom, and this sovereignty should be a fundamental design principle in the EU identity infrastructure.
The Role of Zero-Knowledge Proofs
To ensure a privacy-first approach and the confidentiality of personal information, zero-knowledge proofs (ZKPs) are a Web3 tool that could make this possible. ZKPs allow users to reveal cryptographic proofs instead of clear data, preserving their privacy. Dr. Gross explained:
“ZKPs have the potential to start a new paradigm of compliance that breaks down data silos around identity information.”
He illustrated this with an example: a government-issued digital ID stored on a phone. Only the user knows the information in this digital ID, which includes their name, address, date of birth, nationality, etc.
Summary Review: The integration of zero-knowledge proofs in the EU’s digital identity regulation could be a game-changer, ensuring both privacy and security. As the EU moves forward with its digital identity initiative, the principles of user-centric design and privacy-first approaches will be crucial. With the potential of ZKPs, the EU could set a new standard for digital identity solutions, balancing the need for regulatory compliance with the protection of personal data.
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