Europe’s Data Agencies Express Concerns Over Privacy Standards with The Digital Euro
The European Union (EU) data protection agencies have flagged possible areas concerning user privacy exposures of the proposed digital euro.
In a joint release on Oct 18, the European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS) highlighted their opinion on the proposed Central Bank Digital Currency (CBDC) the digital euro.
According to the statement, the bodies acknowledged the benefits and peculiarities of the CBDC including providing individuals with access to spend the euro on the blockchain through online and offline methods and the added benefit of having a cash alternative.
While the bodies expressed satisfaction with certain proposals that protect user data from the digital euro like online and offline modalities used in processing user data, there are still loopholes within the proposal that require urgent attention.
“We welcome and support the commitment in the proposed Regulation to ensure high levels of data privacy for the use of the online digital euro, and an even higher level of protection for the use of the offline digital euro. In our Joint Opinion, we suggest further improvements to ensure that the rights to privacy and the protection of personal data are effectively preserved.”
Data privacy at the forefront
Both agencies pointed out that a single access point rolled out by the European Central Bank (ECB) and local banks to verify that users don’t own more than the required amount can lead to data privacy breaches because of the role identifiers play.
The terms and powers of these identifiers are vague and their role is questioned alongside the single asset point which may lead to exposure.
The fraud detection and prevention mechanism (FDPM) included in the proposed regulation has come under the scrutiny of data regulators due to vague descriptions.
According to the bodies, some provisions may create a scenario where user privacy is tampered with and recommend a better framework with limited data scares.
EDPB and the EDPS have put forward a “privacy threshold” for online transactions to the effect that offline and low-value transactions are protected from investigations for anti-money laundering (AML) purposes and other related crime-fighting efforts.
Finally, the agencies require a greater standard placed on the ECB to clarify data protection measures across all phases of implementing the digital euro.
Trust remains key in driving a CBDC
As several countries undertake efforts to roll out a CBDC, a recurring concern is the fear of government snooping on citizens creating and enabling improper control.
Irene Loizidou Nicolaidou, the EDPB Deputy Chair noted that data privacy is key in gaining user trust through the entire process including an adoption drive.
“A high standard of privacy and data protection is instrumental in gaining citizens’ trust in this new digital currency.”
Globally, anti-CBDC proponents have described it as a means of government control calling on lawmakers to block the move.
🇺🇸 US House Committee Passes Bill to Block Digital Dollar Launch
— Cryptonews.com (@cryptonews) September 21, 2023
A bill designed to block the potential launch of a #US CBDC has progressed to the floor of the US House of Representatives following the house committee approval on Wednesday.#CryptoNewshttps://t.co/QLoswWxygo
Florida governor, Ron DeSantis promised to ban CBDCs if elected president while criticizing Joe Biden’s attack on cryptocurrencies.
