COTI Chosen by ECB for Digital Euro Privacy Solutions

COTI, a privacy-centric layer-2 solution on Ethereum, has been chosen by the European Central Bank (ECB) to assist in the development of the digital euro. This partnership is part of the ECB's broader initiative to explore and implement a central bank digital currency (CBDC) for the eurozone, with a targeted launch by 2026. COTI's involvement in this project is a significant milestone, following its successful participation in the Bank of Israel’s digital shekel project, which underscores its growing expertise in CBDC solutions.

COTI's role in the ECB's project will focus on integrating its privacy-focused technology to support "conditional payments." This system ensures that the provenance of assets is verified before transactions take place, thereby enhancing the security and transparency of digital transactions. COTI's solution, which is based on Soda Labs’ Garbled Circuits, offers an on-chain approach to privacy that maintains confidentiality throughout the transaction process. This technology is expected to provide more transparent and private transactions for all eurozone residents, aligning with the ECB's goals for the digital euro.

Shahaf Bar-Geffen, COTI co-founder and CEO, expressed that the invitation to join the ECB marks a testament to the expertise and hard work of the COTI team. He emphasized that privacy has become a vital component for the future of web3, highlighting the importance of COTI's contributions to the digital euro project. The ECB's selection of COTI as a pioneer partner reflects the growing recognition of the need for robust privacy solutions in the development of CBDCs.

The digital euro project aims to integrate the new currency into retail payment systems, ensuring that it can be seamlessly used by consumers and businesses across the eurozone. COTI's technology will be instrumental in testing the implementation of the conditional payment system, which is designed to provide enhanced security and privacy for digital transactions. This collaboration is expected to pave the way for a more secure and efficient digital currency ecosystem in the eurozone.

The ECB's initiative to develop the digital euro comes at a time when there is increasing global interest in CBDCs. The recent executive order from the Donald Trump administration promoting dollar-backed stablecoins has raised concerns about the potential impact on European monetary sovereignty. A senior French central banker cautioned that without a digital euro, U.S. policy shifts could undermine Europe's financial sovereignty. This underscores the urgency for the ECB to make swift progress on the digital euro project, with COTI's contributions playing a crucial role in achieving this goal.