The European Commission has unveiled the 20 participants in the second cohort of its pioneering Blockchain Regulatory Sandbox. IOTA, along with a consortium of partners, was selected for its Web3 Identification Solution, a project aiming to revolutionize user authentication in the burgeoning Web3 space.

Facing stiff competition from 60 applicants, IOTA’s solution impressed with its maturity, legal and regulatory relevance, and alignment with the EU’s broader policy goals. The sandbox initiative fosters innovation while providing a safe testing ground for emerging blockchain technologies.

This selection marks a significant milestone for IOTA, paving the way for crucial discussions on Know Your Customer (KYC) compliance and user privacy within the Web3 landscape. Traditional KYC processes are notorious for being inefficient, expensive, and privacy-intrusive. IOTA’s solution tackles these issues head-on by leveraging the power of Distributed Ledger Technology (DLT) and tokenization.

The consortium, comprised of the IOTA Foundation,, IDnow, Bloom Wallet, and HAVN, have developed a system that streamlines user identification for Web3 applications while prioritizing user control over their data. IDnow handles user verification, tokenizes the credentials, and Bloom Wallet acts as a secure storage facility for these tokens. This allows users to prove their identity without revealing sensitive personal information. HAVN facilitates seamless communication and validation across different blockchain networks.

This project isn’t alone in exploring the potential of blockchain for identity management. EBSI-Vector’s initiative delves into wallets and verifiable credentials, while Konnecta Systems’ Trevo focuses on electronic voting utilizing decentralized identities and zero-knowledge proofs.

“Together with our partners,” IOTA remarked, “we continue to push the boundaries of technical and regulatory development in Web 3. We’re excited to showcase our user-friendly KYC solution for decentralized finance and other Web3 applications.” Beyond user identification, the consortium is actively working on ensuring compliance with the European AML Regulation and the Transfer of Funds Regulation for crypto asset service providers (CASPs).