Casey Wagner

Worldcoin — touted by its founders as a cutting-edge, “privacy-preserving” technology — faces scrutiny across the globe as regulators raise concerns about the company’s personal information and biometric data practices.



OpenAI CEO Sam Altman co-founded Worldcoin, a cryptocurrency project complete with a token and “World ID,” which is designed to act as a digital passport. The project’s stated mission is to distinguish humans from AI and eventually create an AI-funded universal basic income, as Altman and co-founder Alex Blania have explained in an open letter. 



Regulatory roadblocks remain, however. In the United States, for example, citizens and residents aren’t allowed to purchase or trade the Worldcoin (<a href="https://blockworks.co/price/wld">WLD</a>) tokens. 



In Europe, German data regulators have eyed the project since November 2022, according to <a href="https://www.reuters.com/technology/german-data-watchdog-probing-worldcoin-crypto-project-official-says-2023-07-31/">reports</a>. In France, days after Worldcoin launched, officials said the legality of collecting biometric data “seemed questionable.”&nbsp;



Police raided <a href="https://blockworks.co/tag/worldcoin">Worldcoin</a>’s warehouse in Nairobi, Kenya, earlier this month, according to <a href="https://kahawatungu.com/police-raid-worldcoin-cryptocurrency-warehouse-in-nairobi-over-data/">local reports</a>. The alleged raid came days after Blania announced via <a href="https://twitter.com/alexblania/status/1686846072901996544?s=20">X,</a> formerly known as Twitter, that the company had paused World ID verifications in the country. 



“World ID is built for privacy,” Blania added. “We look forward to resuming operations, while continuing global rollout.”



Worldcoin has been in contact with the Office of Data Protection in Kenya since April 2022, according to people familiar with the matter. In a letter sent to the office last week, Worldcoin clarified that the company will “never sell users’ personal or biometric data,” per a copy of the letter viewed by Blockworks.&nbsp;



“Operator Partners do not access or process people’s personal or biometric data when conducting Orb signups,” the letter added. “They are akin to marketing agents.”&nbsp;



People around the world can complete “Orb scans” of their irises to prove their human identity. Individuals who receive an scan of their irises must consent to biometric data collection. The <a href="https://vault.pactsafe.io/s/8a18d792-fd76-44db-9b92-b0bb7981c248/legal.html#contract-syn0uxpen">consent form</a> has three options: disagree (no scan will be completed), agree to Orb scan but opt out of data custody (image data is not transferred or stored) and agree to Orb scan and data custody.&nbsp;



Individuals who agreed to the third option consent to having their data stored and sent to “teams in the European Union and the United States.”



“The project will continue to cooperate with governing bodies on requests for more information about its privacy and data protection practices,” the Worldcoin Foundation told Blockworks. “We are committed to working with our partners globally to ensure that the Worldcoin project meets regulatory requirements and provides a safe, secure, and transparent service for verified humans.”&nbsp;



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Kenya

Worldcoin to continue working with regulators after international controversy

Shalini Nagarajan

Kenya has suspended <a href="https://blockworks.co/tag/worldcoin" target="_blank" rel="noreferrer noopener">Worldcoin</a> operations in the country due to concerns about public safety and the integrity of financial transactions.



The country’s Interior Cabinet Secretary, Kithure Kindiki, announced on Wednesday that all related activities would be suspended until relevant public agencies confirm there are no risks to the general public.



“It will be critical that assurances of public safety and the integrity of the financial transactions involving such a large number of citizens be satisfactorily provided upfront,” the politician said in a <a href="https://www.facebook.com/photo?fbid=598481229140719&amp;set=a.598481322474043" target="_blank" rel="noreferrer noopener">statement</a> posted to Facebook.



Any individual or legal entity found involved in, supporting, aiding or abetting Worldcoin activity will face appropriate actions as deemed necessary, he added.



The Worldcoin Foundation told Blockworks that demand for its &#8220;proof of personhood&#8221; verification services in Kenya resulted in tens of thousands of individuals queuing for three days to obtain a World ID.



“Out of an abundance of caution and in an effort to mitigate crowd volume, verification services have been temporarily paused,” a spokesperson said.



&#8220;During the pause, the team will develop an onboarding program that encompasses more robust crowd control measures and work with local officials to increase understanding of the privacy measures and commitments Worldcoin implements, not only in Kenya, but everywhere,&#8221; they said.



Worldcoin, unveiled on July 24, requires users to provide iris scans to obtain a digital ID, also called “World ID.”



In some countries, users are offered a cryptocurrency reward as part of the initiative to establish “universal access to the global economy.”



The central feature of the project’s World ID is the use of a biometric marker, an iris scan, to distinguish humans from artificial intelligence (AI) bots. Individuals who register for this service in jurisdictions that allow it receive Worldcoin&#8217;s cryptocurrency token, WLD.



The primary objective of this digital identification system is to link your &#8220;World ID&#8221; to websites and applications, replacing conventional logins. This process verifies your real identity without the need to disclose personal information such as names and emails.



In the realm of AI development, a digital ID such as this could be crucial to differentiate humans from AI bots on the internet, according to Worldcoin.&nbsp;



The project’s mission appears to be to protect individuals from AI misinformation and establish clarity in identifying trustworthy sources online.



Read More: <a href="https://blockworks.co/news/worldcoin-not-in-us">Worldcoin is here — just not here in the US</a>



<h2 class="wp-block-heading">UK, Germany and France probe Worldcoin over data handling</h2>



The Kenyan government&#8217;s decision follows investigations by other government agencies into the project.&nbsp;



Arthur Cheong, founder of crypto investment firm DeFiance Capital, <a href="https://twitter.com/Arthur_0x/status/1686660120011530241" target="_blank" rel="noreferrer noopener">said</a> that more countries are likely to follow suit soon. According to him, gathering sensitive eyeball biometric data by a single private company, not under the respective government&#8217;s jurisdiction, is deemed too critical and sensitive.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Expect more countries to take similar action soon as eyeballs bio-metrics data is too important and sensitive to be gathered by one single private company not under the their respective government&#39;s jurisdiction. <a href="https://t.co/Z6Ce14L5IN">https://t.co/Z6Ce14L5IN</a>&mdash; Arthur (@Arthur_0x) <a href="https://twitter.com/Arthur_0x/status/1686660120011530241?ref_src=twsrc%5Etfw">August 2, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The UK&#8217;s Information Commissioner&#8217;s Office (ICO) revealed last week that it will be conducting inquiries regarding the project.



In a statement to Blockworks, the ICO clarified its action, emphasizing that organizations must have a valid and legal basis for processing personal data. A spokesperson highlighted that if they rely on consent, it must be given freely and withdrawable without any adverse effects.



Since Nov. 2022, a German data authority has been conducting an independent investigation into the project due to concerns about the extensive handling of sensitive biometric data.&nbsp;



Furthermore, France&#8217;s privacy watchdog has also initiated its own investigation into the matter.



Updated Aug. 2, 2023 at 1:04 pm ET: Added comment from Worldcoin spokesperson.



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identity

Worldcoin faces setback in Kenya as operations halted

James Cirrone

After seeking feedback on CBDCs in February, Kenya’s Central Bank (CBK) has come out with a firm position, saying that in the current environment, “a CBDC in Kenya may not be a compelling priority in the short to medium term.”&nbsp;



On top of that, CBK argued that “on the global stage, the allure of CBDCs is fading.”



Notably, CBK didn’t completely shut down the idea of a digital Kenyan shelling, pledging to monitor CBDC developments around the world and work with other central banks that have issued their own digital currencies, according to a press <a href="https://www.centralbank.go.ke/uploads/press_releases/103592893_Press%20Release%20-%20Issuance%20of%20Discussion%20Paper%20on%20Central%20Bank%20Digital%20Currency%20-%20Comments%20from%20the%20Public.pdf">release</a>.&nbsp;&nbsp;



CBK issued a discussion paper in February going over some <a href="https://blockworks.co/news/kenya-seeks-public-opinion-on-potential-cbdc">possible deployments of a CBDC</a> and has now received over 100 responses from individuals, commercial banks, payment service providers and others.&nbsp;



Some of the benefits respondents highlighted included lower transaction costs, better foreign exchange rates and increased transparency.&nbsp;



One notable downside that the CBK mentioned was financial exclusion, which could very well happen if certain citizens don’t have access to the technology necessary to engage with the digital currency. A large majority of respondents, 87%, told CBK it was the job of the central bank to prevent that from happening.



Other risks CBK listed were disintermediation of banks, high implementation costs, and cyberattacks.&nbsp;



Additionally, CBK has witnessed some of the issues nations that have launched CBDCs have faced, so it has decided to take a wait and see approach.



“Central banks that were first to roll out CBDCs have recently faced challenges that have hampered implementation,” the central bank said in its statement. “Major global central banks have deferred the decision on the adoption of CBDCs. This measured approach is consistent with the approach that CBK is taking.”



So far, 11 countries — most of them Caribbean nations — have created CBDCs, according to the Atlantic Council’s CBDC <a href="https://www.atlanticcouncil.org/cbdctracker/">tracker</a>.



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cbdcs

‘Allure of CBDCs Is Fading’ Globally, Says Kenyan Central Bank

Bessie Liu

<div id="highlights-block_629a6311a4ffd" class="highlights">
 <ul>
 <li>The East African country is one of the top three geothermal energy-producing countries in the world</li>
 <li>This opportunity may put Kenya in a position to be the next bitcoin mining hotspot</li>
 </ul>
 
</div>



KenGen, an electric power generating company in East Africa, has plans to offer bitcoin mining companies its surplus geothermal power in an effort to meet miners’ rising energy demands.



Geothermal power uses heat inside the earth’s crust to generate electricity. The power supply now accounts for <a href="https://www.kengen.co.ke/index.php/our-company/who-we-are.html" target="_blank" rel="noreferrer noopener">39%</a> of energy production at KenGen.



Miners will have the opportunity to relocate to an energy park at KenGen’s main geothermal power station, a little over 100 kilometers from Kenya’s capital, Nairobi. 



Kenya is one of the <a href="https://www.statista.com/statistics/514488/geothermal-generation-worldwide-by-key-country/" target="_blank" rel="noreferrer noopener">top three</a> geothermal energy-producing countries in the world.&nbsp;



The energy producer owns and runs five geothermal power stations, which collectively have a max generation capacity of about <a href="https://www.kengen.co.ke/index.php/business/power-generation/geothermal.html" target="_blank" rel="noreferrer noopener">713 megawatts</a> (MW) of energy. The ground beneath Kenya’s Rift Valley region still holds an <a href="https://renewableenergy.go.ke/technologies/geothermal-energy/#:~:text=In%20Kenya%2C%20it%20is%20estimated,located%20in%20fourteen%20prospective%20sites." target="_blank" rel="noreferrer noopener">untapped</a> 7,000 MW to 10,000 MW of geothermal energy.



Although the US is still the global leader in bitcoin mining, African countries continue to top <a href="https://trends.google.com/trends/explore?q=%22bitcoin%20mining%22" target="_blank" rel="noreferrer noopener">Google search</a> results. Offering a sustainable solution to bitcoin mining companies to enter the country during a time when there have been strong <a href="https://cms.blockworks.co/new-york-passes-bill-restricting-carbon-fueled-crypto-mining-operations/" target="_blank" rel="noreferrer noopener">anti-bitcoin mining stances</a> in countries such as China, the US and Eastern Europe, may in turn put Kenya in position to become the next crypto mining hotspot.



Despite <a href="https://www.centralbank.go.ke/images/docs/media/Public_Notice_on_virtual_currencies_such_as_Bitcoin.pdf" target="_blank" rel="noreferrer noopener">warnings</a> from their government, Kenyans are among the top bitcoin users in the world, according to a <a href="https://go.chainalysis.com/2021-geography-of-crypto.html" target="_blank" rel="noreferrer noopener">Chainanalysis</a> report. 



A move to use geothermal energy for crypto mining could also address some of the <a href="https://cms.blockworks.co/new-york-passes-bill-restricting-carbon-fueled-crypto-mining-operations/" target="_blank" rel="noreferrer noopener">escalating concerns</a> around carbon emissions across the globe.



Todd Esse, founder of HashWorks Digital Industries, a crypto mining fund, told Blockworks geothermal power presents meaningful opportunities for bitcoin miners to reduce their carbon footprints. He also suggested heat thrown off by thermal power plants could be used to generate power for miners. “There’s a lot of wasted energy on the grid where there are combustion turbines running, that produce a lot of waste heat that should be utilized for electricity,” he said.



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Bitcoin mining

Geothermal: Kenya’s Solution to Crypto Mining’s Energy Demand

Sebastian Sinclair

<div id="highlights-block_6205fbaa84437" class="highlights">
 <ul>
 <li>Kenya&#8217;s central bank is requesting public feedback on the applicability of a potential digital Kenyan shilling</li>
 <li>The bank said CBDCs were receiving &#8220;more attention than ever before&#8221;</li>
 </ul>
 
</div>



The Central Bank of Kenya (CBK) is seeking feedback from the public on the applicability of a potential central bank digital currency (CBDC), according to a <a href="https://www.centralbank.go.ke/uploads/press_releases/1985544394_Press%20Release%20-%20Issuance%20of%20Discussion%20Paper%20on%20on%20Central%20Bank%20Digital%20Currency%20for%20Public%20Comments.pdf" target="_blank" rel="noreferrer noopener">press release</a> on Friday.



CBK has issued its <a href="https://www.centralbank.go.ke/uploads/discussion_papers/CentralBankDigitalCurrency.pdf" target="_blank" rel="noreferrer noopener">discussion paper</a> outlining the possible variations of a digital Kenyan shilling as well as the feasibility and risks involved. The paper also examined other payment types including stablecoins and electronic money.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;It is quite apparent that CBDCs are receiving more attention than ever before,&#8221; the bank said in its release. &#8220;However, a key point to note is that despite the traction in attention, the motivations for the issuance of CBDCs vary across countries, as do the policy approaches and technical designs.&#8221;</blockquote>



It said the benefit of a Kenyan CBDC remains unclear and further research on the specific design was needed to shore up confidence in the country&#8217;s domestic markets before it would consider developing a digital form of the nation&#8217;s currency built atop blockchain tech.



&#8220;Naturally, the balance of risks and benefits of CBDCs will vary from one economy to another,&#8221; the bank said.



Consideration of public opinion follows the bank&#8217;s governor, Patrick Njoroge, last year reiterating <a href="https://www.centralbank.go.ke/images/docs/media/Public_Notice_on_virtual_currencies_such_as_Bitcoin.pdf" target="_blank" rel="noreferrer noopener">CBK&#8217;s stance</a> that crypto, such as bitcoin, are not legal tender and are unregulated. The bank initially urged Kenyans to &#8220;desist from transacting&#8221; via the nascent asset back in 2015.



&#8220;To comprehensively evaluate the potential applicability of CBDC in Kenya, CBK requests for public comments on a number of questions,&#8221; the bank said. It is seeking feedback no later than May 2022.



Kenya currently ranks 5th in the 2021 <a href="https://blog.chainalysis.com/reports/2021-global-crypto-adoption-index/" target="_blank" rel="noreferrer noopener">Global Crypto Adoption Index</a>, according to Chainalysis research. Meanwhile, around 87 countries, representing&nbsp;over 90%&nbsp;of global GDP, are currently in the exploration phase of CBDCs.



A further nine countries have launched their own form of CBDC. Nigeria became the latest country to launch its digital naira, the first outside the Caribbean nations, according to research by <a href="https://www.atlanticcouncil.org/cbdctracker/" target="_blank" rel="noreferrer noopener">Atlantic Council</a>.



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