August 1, 2023 | Amanda Khatri
Estimated reading time: 4 minutes
Worldcoin’s biometric bustle draws regulatory eyeballs
Regulators are investigating Sam Altman’s new project Worldcoin, an identity verification platform that scans the user’s eyeballs and links the data to a cryptocurrency, just days after the OpenAI founder launched the venture.
Data protection officials in the UK, France and Germany have opened probes into Worldcoin’s activities, whilst pressure from US regulators has forced the company to abandon plans to launch in Altman’s home country.
The startup, headquartered in Berlin and San Francisco, has said the regulatory attention won’t deter efforts to roll out globally, as a reaction to the concept divides opinion between innovative and futuristic use of both AI and crypto or a dystopian nightmare.
Data expert Richard Cannon, Partner at Stokoe Partnership Solicitors said the launch of Worldcoin “is a serious concern for data protection and crypto regulatory bodies and demonstrates the urgent need for cross-sector and cross-border regulation”.
Worldcoin marries crypto and AI
Launched on 24 July 2023 in 20 countries (but not the US), Worldcoin is built around a global identification system that gives individuals a digital identity and access to digital currencies.
It uses a physical ‘orb’ that scans irises to confirm a person is human and not a robot, which the founders say is necessary for a future in which the distinction may not be clear. Camera sensors and AI algorithms examine a person’s face and eyes, before feeding the data through machine learning and computer vision techniques to generate an iris code, which is a numerical representation of the key aspects of the person’s iris pattern.
Altman believes Worldcoin can “drastically increase economic opportunity” and “scale a reliable solution for distinguishing humans from AI online,” whilst “preserving privacy”.
Regulators disagree, putting Worldcoin’s operations under scrutiny for alleged data privacy breaches and exploitative practices.
Cryptocurrency and artificial intelligence (AI) are topics that have sparked a plethora of debates and widespread engagement. By 2027, nearly 995 million individuals will be using cryptocurrencies. The AI industry is expected to be worth $90 billion by 2025.
Governments around the world are attempting to formulate rules that can effectively oversee and manage the development of AI and crypto, and the emergence of Worldcoin underlines the difficulty ahead as technology continues to outpace regulation.
Worldcoin’s troubled launch
Worldcoin is not accessible in the US due to regulatory pressures surrounding cryptocurrencies. The company rebranded as a digital identity firm, but hurdles to adoption remain and the company has said it will continue the rollout but exclude the US market.
A recent MIT Technology Review also criticized the company for engaging in exploitative practices in various countries, notably Indonesia, Ghana and Chile.
Worldcoin representatives visited these locations, offering free cash, AirPods and promises of future wealth in exchange for participating in the data collection process where their irises were scanned.
Critics said Worldcoin’s practices raise concerns about privacy, consent and use of the collected data, and compliance with data protection regulations, with claims the company targeted lower economic families without informing them of why they did so.
On 25 July 2023, the Information Commissioner’s Office (ICO) said publicly that it would be “making inquiries,” and that firms must perform a Data Protection Impact Assessment (DPIA) before beginning any processing, especially if dealing with high-risk categories like biometric data.
How far the ICO can go remains to be seen, said Cannon, as despite moving quickly, the ICO’s “remit is limited to the use of data”.
“Worldcoin claims that once its systems are optimized it will anonymize and destroy users’ biometric data but are yet to provide clarity regarding when this will happen and have given no indication as to how the data is safely and securely stored,” he said.
French data protection authority CNIL has also opened initiated an investigation into the firm in relation to its biometric data collection practices.
The investigation is on the heels of a similar probe by Bavarian privacy regulators in Germany who retain primary jurisdiction over the matter under EU law.
In a statement to TechCrunch, the Bavarian authority confirmed one of the first aspects it will assess is the obligation to carry out a data protection impact assessment which “should provide a clear analysis of the impact of the envisaged processing operations on the protection of personal data and the safeguards in place to address these risks”.
As Worldcoin pushes the boundaries of biometrics, cryptocurrency and data privacy, it will continue to generate passionate reactions from both advocates and critics. Its ambition to create a universal identification system is intriguing, but with innovation, compliance with regulations is equally important, and the firm will need to comply with all relevant data protection regulations to enhance its credibility.
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