Extract from an article by Jennifer Daniels and Michelle Ann Gitlitz
On October 3, 2018, the European Parliament passed a resolution on distributed ledger technologies and blockchain (the “Blockchain Resolution”). The Blockchain Resolution emphasizes the importance of taking an “innovation-friendly” regulatory approach, while also recognizing that it is of the “utmost importance” that blockchain technologies are compliant with the General Data Protection Regulation (“GDPR”).
The Blockchain Resolution reiterated that blockchain technology promotes the pseudonymization of users but not their anonymization. Anonymization irreversibly destroys any way of connecting the data to a natural person. Pseudonymization de-identifies the data in such a way that, with additional information, connecting the data to a natural person is possible. Although direct identification of individual users of a blockchain network is not possible, indirect identification is possible. Because user data on the blockchain is pseudonymized, it is subject to the GDPR. GDPR compliance is not about the technology, but rather how the technology is used to process personal data, and application of the GDPR’s principles to blockchain proves highly challenging. Immutability of data and decentralization of control, arguably the two most innovative aspects of blockchain, inherently conflict with provisions of the GDPR.
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