As cryptocurrencies continue to gain popularity around the world, countries are taking a collaborative approach to regulate these digital assets and ensure they are not used for illegal activities such as money laundering and terrorism financing. One way that countries are regulating cryptocurrencies is by launching digital wallets that allow them to track transactions in real time. These digital wallets use blockchain technology to create a transparent and secure ledger of all cryptocurrency transactions.
According to a press release, the European Parliament has passed legislation that paves the way for the creation of an EU-wide digital wallet. The move comes as countries around the world are grappling with how to regulate cryptocurrencies amid concerns about their potential to destabilize financial markets and facilitate illegal activities.
European Parliament Has Passed Union’s Proposal
In a resounding victory for the European Union, the proposal for a digital identity framework has passed the European Parliament’s plenary vote with overwhelming support. With 418 votes in favor, only 103 against, and 24 abstentions, the EU-wide framework is set to provide citizens with access to a range of public services, all while safeguarding their privacy.
At the heart of the legislation is the creation of a digital wallet for each citizen, which will allow them to store and manage their digital identity. Furthermore, to ensure that users’ privacy is protected, the framework will incorporate zero-knowledge-proof technology. This technology allows for the verification of a position without the need to reveal any unnecessary data, providing a secure and privacy-preserving way to authenticate users.
Parliament Is Ready to Negotiate with the Council
With the proposal passing the European Parliament’s plenary vote, the EU-wide digital identity framework is one step closer to becoming a reality after negotiations with the council. It is expected that the framework will be implemented soon, providing citizens across the EU with a secure and convenient way to access public services while protecting their privacy. Socialist MEP Romana Jerkovic, who led Parliament’s negotiations, said:
“The implementation of ZK-proof is foreseen in the European Digital Identity Wallet as one the technologies that will give users more control over sharing of personal data. At the same time, it will reinforce the principles of selective disclosure and data minimization.”
Moving forward, the file will enter inter-institutional negotiations. Jerkovic emphasized the need for existing privacy-enhancing technologies to be aligned with one another as they mature, particularly in relation to the EU’s General Data Protection Regulation. Jerkovic said,
“For me, it is very important that we give the users of the Wallet more control over the use, sharing and managing of their own data. All the technical solutions that can help us achieve that goal should be considered and discussed. That is why the Parliament has introduced ZKPs into its position.”
With the launch of digital wallet, the EU will further enter the crypto market to track crypto transactions to avoid illicit activities.