Parity Closes ICO Service on New EU Data Rules

Parity's PICOPS service will be shut down on May 24 over incompliance with EU regulations.

by Marin Marinov
21 May • 3 min
In Regulation

Wallet and blockchain services provider Parity has decided to shut down its Parity ICO Passport Service (PICOPS), citing new European Union data rules, the company said on its website. The service, which allowed customers to associated a single Ethereum address with their identity to meet know your customer (KYC) requirements, will be closed on May 24, a day before EU Data Protection Regulation (GDPR) comes into force.

Parity has decided to dismantle PICOPS after researching if the service can comply with the new EU data rules:

However, as things stand the solutions we have identified restrict the service to a very limited set of features. Because of this, the significant resources required to make PICOPS GDPR-compliant, and the fact that PICOPS is not part of our core technology stack, we have decided to discontinue the service despite overwhelming market needs and demand,” the company said.

PICOPS is a passport for Initial Coin Offerings (ICO) that also enables owners of Ethereum wallets to check if the token offering complies with anti-money laundering (AML) measures in various jurisdictions. It provides ID background checks for verification if wallet users are part of the so-called restricted users: citizens of specific country that are in watchlists (e.g. Interpol Terrorism Watch List or EU visa watchlist ETIAS).

GDPR and the crypto world

Ethereum co-founder Vitalik Buterin called PICOPS closure a “sad development”. Many ICOs are built on Ethereum blockchain.

“This is very sad. A potentially very useful service in the Ethereum ecosystem discontinued due to GDPR issues,” Vitalik tweeted.

one clock and a calendar next to it

The blockchain technology, developed as a Distributed Ledger Technology (DLT), is the main problem concerning GDPR and the crypto sphere. The new EU regulation aims to protect European citizens' personal information by obliging companies to inform customers why, where and when they use their data and to erase such information if clients send a request (the so-called right to be forgotten).

DLT technology, however, makes nearly impossible to change the information, because a change in any piece of data would provoke changes to the block containing the data and to all subsequent blocks.

“On a tamper-proof ledger these rights [e.g. right to be forgotten] cannot, however, be easily implemented. It is safe to assume that at present most blockchains are not GDPR compliant because they are unable to implement these rights. A number of technological solutions are currently being developed that might facilitate this in the future, but we are not there yet,” Oxford University researcher Michele Fink said.

He also sees problems with data erasing:

“The problem is that unlike centralized controllers, nodes and data subjects cannot comply with GDPR obligations considering their limited influence over the information stored on the ledger”, Fink explained in an academic report.

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) and other cryptocurrencies are developed on the blockchain technology.