EU Regulation Claims Newest Crypto Victim
A new set of European Union regulations known as the GDPR, or the General Data Protection Regulation, is poised to seriously revise the way that cryptocurrency and blockchain businesses do business. The newest dictate seeks to provide increased digital rights to citizens within the European Union by ensuring that, in many cases, citizens have the right to remove sensitive personal information on the web.
This creates problem for many businesses on the blockchain because these companies often rely on the public and un-removable storage of financial transactions on the public ledger technology. In addition to having created problems for Bitcoin wallet sites in the past, not to mention calling for the removal of hundreds of accounts that don’t conform to the new rules, the GDPR has led to the removal of PICOPS, Parity’s ICO passport service.
PICOPS operated by verifying that certain components of an ID background check—an aspect of compliance integral to the following of KYC/AML regulations—had been completed by an Ethereum wallet owner. The service had moderate popularity, with many companies jumping at the chance to easily comply with new regulations within the European Union.
A recent press release from the Parity team explains that the service has been shut down indefinitely due to complications arising from General Data Protection Regulation.
The storing of personal information on the blockchain is one indispensable aspect of how Parity’s unique service operates. When the verification of ID-compliance occurs, the service stores the verification automatically on the blockchain.
This spells trouble for the GDPR regulations, because this regulation’s loose definition of what constitutes personal data is being interpreted to include some of the information which is stored on the blockchain. The ideal revision to the PICOPS service would allow users to remove their personal information from the blockchain after it has been verified.
The major problem with this potential solution is that it would require information to be removed from the blockchain. This is impossible under the current infrastructure of the blockchain, because blockchain technology requires the immutability of information; information cannot be changed once it is present on the ledger. If information could be changed of financial info redacted, the entire integrity of the system would be in jeopardy.
The Future Of PCIOPS
The Parity Technologies team outlined that “new and untested challenges” resulted from the release of the GDPR law in the EU. The team surveyed a few ways that the service could be changed to maintain effectiveness while refraining from violating the regulation. However, they remarked that these revisions would “restrict the service” to only a few features.
Consequently, the company has decided to remove the service from action. While they acknowledge the significant “market needs and demand,” the company decided to discontinue the service because of the immense problems caused by the EU regulations.
This latest move marks a trend of problems caused by the new GDPR. As the blockchain continues to gain momentum all over the world, combating privacy-based legal problems will be essential to its success.