IOTA Foundation, along with a consortium of partners, has secured a coveted spot in the European Commission’s Blockchain Sandbox program with their innovative Web3 Identification Solution. This selection marks a significant milestone for IOTA, placing them at the forefront of shaping identity verification processes in the burgeoning Web3 space.

The European Blockchain Sandbox, launched in 2023, is a highly competitive program designed to foster the development and testing of promising Distributed Ledger Technology (DLT) solutions. Every year, only a select few projects (no more than 20) are chosen to participate in this sandbox environment, allowing them to refine their technology while engaging with regulators across the European Union.

IOTA’s Web3 ID Solution tackles a persistent challenge within the Web3 ecosystem: Know-Your-Customer (KYC) processes. Traditional KYC procedures are often cumbersome, expensive, and raise privacy concerns for users. IOTA’s solution aims to revolutionize this process by leveraging DLT and tokenization.

Empowering Users with Control Over Their Data

The core concept behind IOTA’s Web3 ID Solution lies in empowering users with control over their data. Through a collaborative effort with IDnow,, Bloom Wallet, and HAVN Network, IOTA has developed a reusable KYC system that prioritizes user privacy and convenience.

The solution streamlines the identification process for Web3 users. First, users undergo a remote verification process facilitated by IDnow, ensuring compliance with EU Anti-Money Laundering (AML) and KYC regulations. This verification can be either fully automated or include human assistance depending on the specific circumstances.

Following verification, steps in to tokenize the process. This essentially creates a digital token representing the user’s verified identity. This token is then securely stored within the user’s Bloom wallet, a universal wallet compatible with the IOTA, Shimmer, and EVM ecosystems.

The beauty of this system lies in its ability to verify user identity without revealing any sensitive personal information. Web3 applications (dApps) and other services can recognize the user’s identity token, confirming verification without needing access to the underlying data. This token can be reused across various identification processes, offering significant efficiency gains.

For situations requiring disclosure of identity information, the system allows authorized parties to request a reveal of the token’s underlying data. Additionally, the token can be revoked if necessary. Notably, the solution also offers the option to issue identity information in the W3C Verifiable Credential format, enabling permissionless sharing in contexts beyond the blockchain.

A Strong Partnership for Advancing Web3 Identity

The success of IOTA’s Web3 ID Solution hinges on the collaboration with its esteemed partners. IDnow brings its expertise in secure identity verification, while contributes its open-source decentralized identity and wallet infrastructure. Bloom Wallet serves as the secure storage solution for user identity tokens, and HAVN Network provides the dedicated infrastructure for interchain communication and transaction validation.

This combined effort signifies IOTA’s commitment to pushing the boundaries of both technological development and regulatory compliance within the Web3 landscape. With its selection for the European Blockchain Sandbox, IOTA has the opportunity to showcase its solution’s potential to revolutionize KYC processes for DeFi and other Web3 applications. The future holds promise for a more streamlined, user-centric, and privacy-preserving approach to identity verification in the Web3 era.

By Alex Wheeler

Alex is a lead writer at AltcoinsAnalysis, bringing the audience all leading developments in the blockchain industry and the latest trends in the cryptocurrency market.