The European Union's data protection watchdog, the European Data Protection Board (EDPB), has urged for stronger privacy protections in the proposed legislation for a digital euro. The EDPB recommends that low-value online and offline digital euro (cryptocurrency) transactions should not be subject to anti-money laundering and counter-terrorism financing monitoring.
In their statement, the EDPB "strongly recommended" the inclusion of a privacy threshold in the draft law, which would cover online transactions using the digital euro. This threshold would ensure that neither offline nor online low-value transactions are traced for anti-money laundering and counter-terrorism financing purposes.
To mitigate the risks associated with low-value online digital euro transactions, the EDPB and the European Data Protection Supervisor (EDPS) suggest the incorporation of technical measures during the design phase of the digital euro.
The European Central Bank (ECB) is poised to announce its plans to advance preparations for a digital euro, aligning with central banks worldwide seeking to stay at the forefront of technological advancements in the realm of payments.
The European Commission has put forward a draft law aimed at providing legal support for the digital euro. However, there are concerns among consumers that its adoption may displace cash and potentially allow authorities to monitor spending. To address these concerns, the draft law's approval has been delayed to provide more time to ensure the digital euro retains the anonymity characteristic of cash in low-value transactions.
The EDPB also calls for further clarification in the draft law regarding the data protection responsibilities of the ECB and payment services providers (PSP). This includes specifying the legal bases that the ECB and PSP should rely on and the types of personal data they should handle for the issuance, distribution, and use of the digital euro.
Notably, the EDPB appreciates that users of the digital euro will always have the choice to use digital euros or cash. Irene Loizidou Nicolaidou, the EDPB's deputy chair, emphasized the importance of maintaining a high standard of privacy and data protection to instill trust among citizens in this new digital currency.
By fLEXI tEAM