Brazil's Data Protection Agency Upholds Ban on World ID Cryptocurrency Compensation

Brazil’s data protection agency has upheld its decision to restrict cryptocurrency compensation tied to the World ID project, citing user privacy concerns. The National Data Protection Authority (ANDP) rejected a petition by World ID developer Tools For Humanity to review its ban on offering financial compensation to users who provide biometric data through iris scans. The agency stated that it will “maintain the suspension of the granting of financial compensation, in the form of cryptocurrency (Worldcoin - WLD) or in any other format, for any World ID created by collecting iris scans of personal data subjects in Brazil.” The company faces a daily fine of 50,000 Brazilian reais if it resumes data collection activities.

The controversy surrounding World ID began in November of last year when the ANDP initiated an investigation into the project. Concerns were raised that financial rewards could compromise users’ ability to consent to offering sensitive biometric data. World ID verification in Brazil was short-lived, with the ANDP banning data collection more than two months after it was launched in the country. Tools For Humanity was ordered to stop offering services to Brazilians as of January 25.

The World ID project, developed by Tools For Humanity, aims to create a unique digital passport for users by collecting iris scans. This digital identity is intended to authenticate humans online, addressing issues such as AI deepfakes and Sybil attacks. However, the use of biometric data for financial compensation has raised significant privacy concerns, leading to regulatory scrutiny and eventual bans in regions like Brazil.

The ANDP’s decision underscores the growing regulatory challenges faced by digital identity projects that rely on biometric data. As the use of digital identification methods increases due to the rise of AI and online fraud, companies are under pressure to develop solutions that comply with privacy laws and regulations. The ANDP’s stance on World ID serves as a cautionary tale for other projects in the digital identity space, highlighting the importance of user consent and data protection in the development of such technologies.

Although World ID has run afoul of Brazilian law, the use of digital identification methods is growing in other markets due to the rise of AI deepfakes and Sybil attacks. The rise of bots and AI is also watering down online discourse on social media platforms. Some companies are attempting to create digital identity solutions without triggering privacy concerns and regulatory crackdowns. Earlier this year, Billions Network launched its own digital identity platform that doesn’t require biometric data. The platform is based on a zero-knowledge verification technology known as Circom and has already been tested by major financial institutions.