IOTA Foundation’s Web3 solution chosen for EU Blockchain Sandbox initiative

The IOTA Foundation, in collaboration with its partners, has developed a Web3 Identification Solution that has been selected for inclusion in the European Blockchain Sandbox.

According to a June 13 blog post, the IOTA Foundation, in partnership with wait.id, IDnow, Bloom Wallet and HAVN, has developed a selected web3 identification solution for the European Blockchain Sandbox.

The European Commission launched this project in 2023 to provide a controlled environment for testing and validating new distributed ledger technology (DLT) solutions while collaborating with regulators across the EU.

The Web3 Identification Solution aims to transform traditional Know Your Customer (KYC) processes, which have long been hampered by inefficiencies, high prices and privacy concerns.

By leveraging DLT and tokenization, the solution gives users control over their personal data while providing an efficient and privacy-preserving way to identify themselves in Web3 environments.

The identification procedure begins with users completing remote authentication with IDnow, Europe’s leading authentication platform provider. This procedure meets EU Anti-Money Laundering (AML) and KYC criteria.

Following this, the identity is tokenized by walt.id, a leading provider of open-source decentralized identity and wallet infrastructure, and is then stored as a soul-linked token in the user’s Bloom wallet.

The Soulbound token can be recognized by Web3 decentralized applications (dApps) and other services to verify the user’s identity without revealing personal information.

This reusable token eliminates the need for repeated identification procedures, improving user experience and privacy.

The reusable token improves user experience and privacy by eliminating the need for repeated identification procedures.

Identity information may be disclosed and the token may be canceled when requested by an authorized party.
The credentials can be published as a W3C Verifiable Credential, which allows unauthorized sharing in off-chain scenarios.

HAVN Network, an expert in integrating hybrid blockchain technology, provides custom EVM-compatible KYC chain architecture connected to the Shimmer network. This ensures regulatory compliance and facilitates effective cross-chain communication and transaction verification.

The selection of the Web3 Identification Solution for the European Blockchain Sandbox represents an important milestone in facilitating regulatory discussions on KYC and privacy in the context of Web3. This is especially significant given the increasing interest of authorities in decentralized finance (defi).

In addition to the Web3 Identification Solution, the IOTA ecosystem has been further enhanced through a partnership with Pyth Network, a leading provider of low-latency price oracles.

The integration, announced by the IOTA foundation in a separate blog post, brings Pyth’s oracle services to the IOTA EVM to improve data accuracy and security and support the evolving decentralized finance (DeFi) environment.

This partnership is particularly advantageous for decentralized exchanges (DEXs), lending protocols and derivatives platforms.

Providing price updates multiple times per second, Pyth Network supports over 300 applications and 50 blockchains, ensuring constant availability of accurate data.