EU Agrees on Digital ID and Wallet Vision, Likely to Implement in 2 Years
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EU Agrees on Digital ID and Wallet Vision, Likely to Implement in 2 Years

The EU agreed on a common vision for an European digital identity.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

The EU is very close to agreeing on what it means to own digital assets. The Council of the EU is laying the groundwork for European digital identity (eID), which will serve as the EU’s digital wallet. What does that fusion look like?

EU’s Historic Turning Point on Digital Access

Consisting of 27 countries, the EU accounts for 447 million people. Although its nominal GDP has fallen in 2022 when the EU sanctioned Russia, it is still trailing behind the US at $18 trillion vs. $24 trillion, making it the third largest market behind China. It is, therefore, important when this economic juggernaut sets the rules of engagement on digital assets.

The Council of the European Union is the EU’s governing body. As of Tuesday, the Council revised the regulation on the European digital identity (eID). This would be a personal digital wallet hosted on people’s smartphones like other apps.

Across EU nations, the eID would follow common technical standards and compulsory certification. This would avoid standard/update fragmentation and security holes. However, this “Union toolbox” is yet to be developed. What would the eID wallet look like?

eID as the Universal Identity Wallet

Inherently modular, the eID would contain a person’s national identity, payment cards, driving, and other government-issued licenses, including medical information. In short, EU citizens could store and manage all official EU documents in one app.

All EU member states would accept all aspects of the wallet, starting as the valid means for identification, thus replacing passports. As such, EU citizens could even use eID to request loans or to board planes.

Regarding data privacy and security, eID will carry on the General Data Protection Regulation (GDPR), regarded as the world’s strictest privacy framework. In practice, this means that user data is not revealed when proving some aspect of the identity. For example, if one were to prove one’s age, nationality, name, or gender would not be revealed.

Presently, eID would apply to only 18 EU nations, with the goal to reach all 27 in the near future. Image credit:

The Council set a period of 24 months for the wallet’s rollout, counting from the day the final regulation is adopted. 

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Wallet’s Fees and Attestations

The eID wallet itself will be free of charge.  However, when it links with third-party authentication services, there may be attestation costs. Nonetheless, under the Digital Markets Act (DMA), the latest wording requires gatekeepers, such as other wallet providers, to ensure free-of-charge interoperability for accessing their services.

DMA defined “gatekeepers” as these service providers:

“online intermediation services such as app stores, online search engines, social networking services, certain messaging services, video sharing platform services, virtual assistants, web browsers, cloud computing services, operating systems, online marketplaces, and advertising services.”

As eID is implemented, EU member states’ public sector institutions will be able to issue qualified electronic attestations to the wallet directly. For example, the government’s social assistance could be managed via eID, including the funds received.

Is eID Bound for Abuse?

As a modular identity app, eID is the infrastructure for the central bank digital currency (CBDC). The European Central Bank (ECB) has already revealed that the digital euro will be unlike physical banknotes in that they will not be anonymous. Because of their digital nature, these centralized tokens are easily traced and programmed to serve whatever logic is programmed and tweaked into them. 

In China, we have already seen the impact of fusing digital IDs with digital wallets. Authorities can turn off people’s access to banks, transit, jobs, apartments, medical services, and education. 

In Europe, there was a strong push in the last two years to implement the same system. For example, in France, President Macron erected a digital wall between citizens and cafes, restaurants, shopping centers, retirement homes, social institutions, and hospitals. One would’ve had to provide a digital “health pass” to access these previously taken-for-granted venues. 

Furthermore, eID’s usage may also be governed by one’s “carbon footprint” allowance. Case in point, at the 2022 WEF’s Davos Agenda summit, the president of Alibaba Group, J. Michael Evans, announced the rollout of an individual carbon footprint tracker to monitor one’s every activity as part of a green transition.

The European Commission actively participates at the World Economic Forum (WEF). At the same Davos summit, the EC’s president Ursula von der Leyen noted that smartphones will serve as the cornerstone for a digital/green transition, requiring a massive uptick in lithium excavations.

“And it is sure: the green and digital transitions will massively increase our need for these materials.”

Special Address by President von der Leyen at the World Economic Forum

No doubt, eID is bound to be exceedingly convenient. The wallet’s users could open a bank account, file for tax returns, apply for a university, prove their age, rent a car, board a plane, or require issuing any government/medical document. But, by the same digital token, this infrastructure can be as easily used to cut off those services.

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