April 19, 2024
Authorities Push for Privacy Threshold in Online Transactions for Digital Euro
Latest Cryptocurrency News

European Data Regulators Propose Enhanced Data Protection for Digital Euro

On October 18, a joint statement was issued by the European Data Protection Board and the European Data Protection Supervisor concerning the regulation of a digital euro, as initially proposed by the European Commission in July 2023. In their statement, the regulators put forth a series of recommendations aimed at strengthening the personal data protection standards for the central bank digital currency (CBDC) of the European Union.

One of their recommendations involves providing further clarity on the proposed verification process for determining the maximum amount of digital euros that can be held within an individual’s account. The current draft permits the European Central Bank (ECB) and national central banks to establish a singular access point to each user’s data, and both regulatory bodies advise conducting an assessment to evaluate the necessity and proportionality of such a singular access point. They stress that the use of technical measures for the decentralized storage of these identifiers is entirely feasible.

The regulators also bring attention to a potential issue with the envisaged fraud detection and prevention mechanism for the CBDC, highlighting a lack of predictability in this area. They suggest exploring less intrusive measures from a data protection perspective.

Furthermore, the authorities strongly recommend the establishment of a privacy threshold for online transactions. Below this threshold, both offline and online transactions of low value would be exempt from tracking for the purposes of anti-money laundering and combating terrorism financing. However, they do not specify a particular monetary amount, referring only to the transaction limit, which encompasses low-value daily transactions.

This week, the governing council of the ECB announced the commencement of the preparation phase for the digital euro project, following a two-year investigation. This phase is expected to last for two years and will primarily focus on finalizing the regulatory framework for digital currency and selecting potential issuers.

Image by freepik

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