Ethereum Proposes Modular Strategy for GDPR Compliance

Ethereum, a leading blockchain platform, is exploring ways to address data privacy concerns while aligning with the European Union’s General Data Protection Regulation (GDPR). A recent proposal by Ethereum community member Eugenio Reggianini suggests a modular compliance strategy to reconcile public blockchains with GDPR requirements. This approach aims to manage data effectively and enhance privacy within the Ethereum ecosystem.

Reggianini’s proposal, drafted on June 9, advocates for a modular architecture that pushes personal data to the edges, such as wallets and decentralized applications (DApps), and utilizes offchain storage with metadata-erasure. By splitting roles cryptographically, the proposal focuses GDPR controller duties on a small set of entities, while the wider network acts as mere processors or falls out of scope. This modular design could integrate various privacy-enhancing technologies (PETs), achieving GDPR compliance in permissionless blockchain environments.

The technical roadmap outlined in the proposal includes several technologies already being integrated or proposed for Ethereum. Proto-danksharding (EIP-4844) limits transaction blob lifespans to around 18 days, enforcing storage minimization. Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zk-SNARKs) improves privacy by involving validators in confirming succinct cryptographic proofs rather than viewing transaction payloads, reducing onchain data visibility. Other PET integrations that could aid in GDPR compliance include Fully Homomorphic Encryption, Trusted Execution Environments (TEEs), multiparty computation (MPC), Proposer-Builder Separation (PBS), and Peer Data Availability Sampling (PeerDAS).

The proposed GDPR compliance framework breaks down the implications across Ethereum’s three layers: the execution layer, consensus layer, and data availability layer. The execution layer would operate as processors relaying only encrypted or blinded data, while the consensus layer would validate commitments and zero-knowledge proofs. The data availability layer, under PeerDAS, would store only anonymous shards for limited timeframes, aligning with GDPR’s data minimization principle. By focusing data controllership on the application layer and leveraging PETs, Ethereum can protect user privacy without compromising its core principles.

However, the success of this framework depends on broad community adoption, developer buy-in, and potential alignment with EU regulators. The proposal highlights the importance of integrating privacy-enhancing technologies to ensure compliance with GDPR while maintaining the decentralized nature of the Ethereum network. This modular approach could set a precedent for other blockchain platforms seeking to balance data privacy with regulatory requirements.