EU passes law for digital wallets: That’s why there is headwind

digital wallets

This week, the European Parliament (EU) has made significant strides in the field of digital wallets and smart contracts. These developments are important not only for the overall digitalization of the European Union, but also for the field of cryptocurrencies. Of the 545 members present, 418 voted in favor of the digital identity proposal, 103 members opposed and 24 members abstained.

EU also passes digital wallets legislation

The digital identity framework aims to enable citizens to use their digital wallets to access public services. These include, for example, electronic administrative procedures, tax returns or online purchases. More and more public services now offer the possibility to pay or trade with cryptocurrencies. As a result, the importance of digital identity continues to increase. By using digital identities and cryptocurrencies, transactions can be carried out faster and more efficiently without the risk of fraud or identity theft.

An important part of the digital identity framework is the use of the zero-knowledge proof (ZK-Proof), which is also relevant for cryptocurrencies. For example, ZK-Proof allows users to verify transactions without revealing their personal information. This creates an important protective mechanism that protects the privacy of users and at the same time ensures the security of transactions.

The regulation on smart contracts is another important advance that is also of great importance for the cryptocurrency space. Smart contracts are an important part of blockchain-based applications. These offer the possibility of completing transactions automatically without the need for a central authority. With the regulation, smart contracts are now also covered by the law. This, in turn, could strengthen the legal basis for many cryptocurrency-based applications in the EU.

Read more : EU passes smart contract regulation: what does that mean?

Why is the European Parliament facing opposition?

Overall, these developments are an important step for the acceptance of cryptocurrencies and blockchain-based applications in the EU. By creating a secure and efficient framework for digital identities and smart contracts, trust in these technologies will be strengthened. This may lead to wider acceptance and application. Which is particularly important for the future of cryptocurrencies. As these technologies aim for wider application and use. As a result, they could establish themselves in a growing number of industries and use cases.

However, the “International Association for Trusted Blockchain Applications” from Brussels has expressed concerns about the recently adopted framework for digital identity throughout the EU in an open letter to EU politicians. She primarily criticizes the deletion of a section from the text of the regulation that deals with electronic cash books. Among other things, the letter emphasizes the key role of electronic ledgers as a component of trust architectures, but also for the development of European digital infrastructures that are robust against cyber attacks. 

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