EU Privacy Shield Ruling Is an Opportunity and Conundrum for Decentralized Tech

Last week the Court of Justice of the European Union (CJEU) struck down a key data-sharing settlement between the United States and European Union, with potential implications for U.S. blockchain corporations that serve EU prospects. 

The 2019 settlement, generally known as the Privacy Shield, lets American corporations self-certify they’re complying with knowledge privateness legal guidelines, just like the General Data Protection Act (GDPR). GDPR provides finish customers higher management over knowledge held by corporations like Google and Facebook.   

Steven Blickensderfer, a know-how and privateness lawyer on the agency Carlton Fields, stated the choice dramatically alters how corporations can course of knowledge and impacts not simply the U.S., however different nations with strong surveillance like China and Russia. 

“The court’s imploring data protection authorities in Europe to no longer sit idly by while illegal transfers of data are taking place,” he stated. “The court has called the data protections supervisor to action.”

Companies dealing with a European’s private knowledge are presupposed to share solely that knowledge with entities in nations which have related protections. The U.S. lacks sturdy federal privateness laws, and has a protracted historical past of safety companies just like the National Security Agency secretly surveilling huge swathes of non-public knowledge, beneath legally doubtful justifications. When an individual within the EU makes use of a service like Facebook or Google, they’re sending their knowledge exterior of the EU. 

Next steps for corporations

Over 5,000 U.S. corporations had been licensed beneath the Privacy Shield deal, together with Facebook, Twitter, Amazon, and Google, that means they could now need to  take in depth steps to determine find out how to shield EU prospects knowledge, and adjust to GDPR in different methods. This is a problem for smaller-sized corporations, stated Blickensderfer, contemplating the measures wanted to account for knowledge and the variety of third events concerned. 

One various is to ensure customers give knowledgeable consent, so their knowledge is processed within the U.S. and private knowledge could also be used for industrial functions. But, stated Blickensderfer, it’s uncertain that current phrases of service cowl that. Another choices is reviewing the usual contract language, making extra express how, for instance, the U.S. authorities might entry knowledge. 

Prominent cryptocurrency change Coinbase was licensed beneath the Privacy Shield. When requested what the affect on their EU prospects is perhaps and what exchanges and blockchain corporations ought to be seeking to in its place, it stated nothing had modified for now. 

“We have been monitoring developments regarding the EU/US Privacy Shield closely and, in light of the CJEU’s recent decision, we will continue to use approved data transfer mechanisms…to ensure Coinbase provides services to customers in the EU without interruption,” stated a Coinbase spokesperson. 

Max Schrems, an Austrian lawyer and activist, introduced the case to the CJEU over issues in regards to the legality of how Facebook was utilizing his knowledge. The courtroom discovered that U.S. surveillance legal guidelines conflict with basic EU rights. 

“This judgment is not the cause of a limit to data transfers, but the consequence of US surveillance laws,” Schrems stated in a press release.  “You can’t blame the Court for saying the unavoidable – when shit hits the fan, you can’t blame the fan.”

Confusingly, U.S. Secretary of Commerce Wilbur Ross stated in a assertion the Department of Commerce will proceed to manage the Privacy Shield program, together with processing submissions for self-certification, recertification to the Privacy Shield Frameworks and sustaining the Privacy Shield List. All this regardless of the very fact this system was invalidated instantly on the EU facet, and due to this fact seemingly accommodates little worth. 

“That’s the big unstated response to this statement by the Secretary of Commerce,” stated Blickensderfer. “Why would you want to remain in this program if you are not getting the benefits it otherwise provided to you?”

Ross stated he was upset within the determination and hoped to “limit the negative consequences to the $7.1 trillion transatlantic economic relationship.”

Enter privateness tech

Companies that use privacy-oriented know-how and embody options like end-to-end encryption, might have a better time complying with the brand new actuality, in keeping with Blickensderfer. 

“Decentralized tech and tools like blockchain can help establish the existence of sufficient protections – or ‘supplementary measures,’ to borrow from the Court’s opinion – to ensure the adequacy of the protections necessary to satisfy the GDPR,” he stated. 

At the identical time, GDPR compliance presents a problem to these applied sciences due to the seemingly unavoidable battle between immutability on the one hand and the correct to be forgotten, or to limit processing, on the opposite.

In “cross-border transfers under the GDPR, these technologies can certainly help,” Blickensderfer stated. “But there are other potential unavoidable conflicts… when considering wholesale adoption of this technology to demonstrate GDPR compliance.”

End-to-end encryption prevents state surveillance apparatuses from compelling corporations to entry and share that knowledge with them. Additionally, decentralized tech doesn’t have a centralized level of management, that means there are only a few methods for one actor to brute power entry all the knowledge on the community or protocol. 

Raullen Chai, CEO of IoTex, which leverages blockchain to safe the web of issues, stated individuals who need to protect their privateness have had little choice however to depend on permissive company insurance policies and ineffectual laws.  

“At the heart of the problem is data ownership,” stated Chai. “Decentralization offers a way to stop storing data centrally and allow individual people and entities to own their data.”

Huang Lin, CTO of Suterusu, which is working to develop privateness safety over sensible contracts, transactions and knowledge for blockchain networks, stated a brand new transatlantic knowledge switch framework giving people extra management over their knowledge privateness is urgently wanted.

“The current trend on private data transfer regulation exemplified by European GDPR is that data will be more and more governed according to digital code,” he stated. “In a word, code is the law.”

In the subsequent few years, he sees scalable sensible contract platforms actively adopting quite a lot of superior cryptographic applied sciences. Zero-knowledge proofs, or protocols that permit knowledge to be shared with out a password, or any info related to the transaction, is one such know-how. 

Another is safe multi-party computation, during which numerous separate but related computing gadgets perform a joint computation with out understanding the opposite inputs, simply the outputs. This technique protects towards intrusion as a result of there isn’t a trusted third get together that handles all the information concerned.


The chief in blockchain information, CoinDesk is a media outlet that strives for the very best journalistic requirements and abides by a strict set of editorial insurance policies. CoinDesk is an unbiased working subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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