What We’re Reading: EU Parliament Adopts Blockchain Resolution

On October 3, 2018, the European Parliament passed its long awaited resolution on distributed ledger technologies, or “blockchain” (the “Blockchain Resolution”).

The Resolution’s purpose is to protect and empower EU citizens and businesses with respect to the specific issues that arise in relation to blockchain technology.

  • Quick and simple description: Blockchain is a decentralized online database, a sort of public ledger that anyone can add to with all changes tracked. It’s the technology that powers Bitcoin. You might think of it as a Google Doc shared with millions of people.

Certain technologies, including blockchain, raise interesting questions and challenges when it comes to compliance with privacy laws like the GDPR. Blockchain does not de-identify or anonymize personal data, but could be used with pseudonymised data, which makes indirect identification of a data subject possible. Processing of such pseudonymised data is subject to the requirements of the GDPR and therefore a legal basis (like consent or legitimate interest) needs to be relied upon before personal data can be processed, and data subject rights must be considered. One of the GDPR’s rights that is difficult to reconcile with operationalizing blockchain is the “right to be forgotten.” In particular, since the foundation of blockchain relies on the logging and storing of data chains, deletion of data would disrupt the chain and largely undermine blockchain rationale.

The European Parliament’s Resolution expresses clear support for blockchain, specifically calling for “open-minded, progressive and innovation-friendly regulation.”

It’s important to note that European Parliament resolutions do not have legally binding effects and merely set out the Parliament’s position with the intention to encourage other EU institutions – in this case the European Commission – to take legislative action. It remains to be seen how the EU legislators will deal with these challenges.