IOTA Is Developing a Solution for KYC Identity Verification on Web3 with Four Partners

The IOTA Foundation has been dealing with the topic of digital identities for years. Now, together with four partners, a new initiative is being made to implement identity verification (KYC) in Web3 in a legally compliant manner.

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In search of promising use cases, IOTA is once again turning to the topic of digital identities

Foundation boss Dominik Schiener promotes the “KYC Done Right With IOTA” initiative via X (translated: Know your customer (KYC) done right with IOTA). In an associated blog post, IDnow, walt.id, SPYCE.5 and the Bloom Wallet are presented as partners for the project. With walt.id , the foundation had already brought a solution called “ Login with IOTA ” onto the market around a year ago , but basically nothing was heard about after that.

The challenge is clear: In the EU and elsewhere, the rules for crypto trading are constantly being tightened and a focus is on preventing money laundering and terrorist financing. That is why legislators are implementing measures with which, for example, money transfers worth more than 1,000 euros can be clearly assigned to private or legal persons, even if they come from self-managed wallets. From this starting position, IOTA now wants to establish a convenient and practical solution together with its partners.

The concept: IDnow handles the initial identity verification online, where name, date of birth, address and other personal details can be recorded. You know such processes as KYC from the first registration at crypto exchanges. walt.id then generates a unique token in IOTA format from this verified information. The Bloom Wallet as a third step stores this identity token. Like SPYCE.5, Bloom Wallet is a project founded by former employees of the IOTA Foundation.

According to the project description, SPYCE.5 focuses on making the KYC infrastructure on the IOTA side project Shimmer (SMR) efficient. You notice: At the current stage of development, the ID solution is designed for the IOTA ecosystem. Even in an accompanying explanatory video , the uses for KYC and digital identity are limited to DeFi under Shimmer and vaguely Web3.

Conclusion: IOTA ID – old wine in new barrels?

In late summer 2021, IOTA had already raved about a successful pilot project on digital identities together with the Dutch de Volksbank. IOTA also wanted to be involved in issuing and validating test certificates in the wake of the Corona pandemic.

Foundation boss Schiener is already excited that the new KYC solution will make it easier for investors to enter into financial transactions in the IOTA ecosystem. But the other truth is: There is tough competition in the field of digital identities, in which IT giants like Microsoft as well as Ethereum (ETH) are already active. It’s hard to imagine that IOTA and its little-known cooperation partners can suddenly set a new standard here.

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First published in BLOCK-BUILDERS.DE. A third-party contributor translated and adapted the articles from the originals. In case of discrepancy, the originals will prevail.

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