Key Takeaways:
On June 9, Ethereum community member Eugenio Reggianini presented a proposal aimed at ensuring compliance with the General Data Protection Regulation (GDPR) during the recent consultation by the European Blockchain Association. The plan focuses on utilizing off-chain personal data storage and employing privacy-centric technologies to limit exposure within Ethereum’s modular framework. A new classification system is suggested, wherein only front-end participants, such as wallets and decentralized applications (dApps), would be recognized as GDPR controllers.
Reggianini, known as “EugeRe,” has put forth a series of recommendations designed to enhance privacy and data governance in alignment with European Union data protection standards. His proposal outlines that control over personal data should be assigned to front-end players like wallets and dApps, while the underlying infrastructure is encouraged to manage only encrypted or anonymized information.
Revised Roles for Ethereum Under GDPR
The proposal asserts that identifiable personal data should remain off the blockchain, and that nodes should only transmit references or proofs rather than any direct identificatory data.
To further diminish exposure risks, Reggianini highlights several privacy-enhancing strategies, including the implementation of zk-SNARKs, the separation of proposer and builder functions, data availability sampling, and the use of homomorphic encryption.
He points to innovations such as proto-danksharding as potential tools to enforce data minimization, utilizing temporary storage and automating data removal processes.
The document also suggests a reclassification of blockchain participants regarding GDPR compliance. Wallet providers and developers of dApps would maintain their status as data controllers, whereas others like mempool relays, validators, and data availability nodes would be designated as data processors or potentially exempt if they solely manage non-identifiable fragments.
The proposal emphasizes that Ethereum’s modular architecture could be leveraged as a compliance framework, intentionally designed to reduce exposure risk. This includes a clear division of roles among the execution, consensus, and data availability layers, thereby managing compliance without compromising Ethereum’s decentralized ethos.
Announcing the Ethereum Foundation Treasury Policy https://t.co/bU566m1zX5
— Ethereum Foundation (@ethereumfndn) June 4, 2025
EU Regulations Drive Adjustments within the Crypto Space
Reggianini’s summary asserts that achieving GDPR compliance for Ethereum is feasible if personal data remains confined to the application level and does not traverse to the base-layer infrastructure. This condition would permit adherence to current regulations without necessitating central authority controls over the network.
In response to GDPR requirements, several cryptocurrency projects have transitioned their identity verification and data storage practices off-chain. Conversely, some initiatives have opted to withdraw from the European market altogether, citing a lack of technical capability or legal certainty.
Critics of the GDPR have pointed to the legislation’s rigid definition of controllership, arguing that it imposes centralized assumptions onto inherently decentralized networks. Instances like the Worldcoin project facing restrictions due to biometric data misuse highlight the ongoing conflict between data rights and the principles of open protocols.
Reggianini’s blueprint contributes to a growing discourse advocating for a more sophisticated regulatory framework, one that appreciates the distinct technical roles within blockchain networks instead of categorizing all nodes uniformly as data controllers.
Frequently Asked Questions (FAQs)
Why is the GDPR difficult for public blockchains like Ethereum?
The GDPR was originally designed for centralized systems with clear data controllers. However, public blockchains distribute data processing across numerous nodes, making it unclear who holds the responsibility for compliance.
What are the risks of non-compliance with GDPR in blockchain systems?
Entities that process personal data without a legitimate legal basis may face significant fines, enforcement actions, or may be required to cease operations within the EU market.
Could GDPR frameworks eventually change to accommodate decentralized tech?
Some policymakers and advocacy groups are advocating for legal reforms that would better differentiate between active controllers and passive processors in blockchain networks; however, no formal amendments have been enacted to date.
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