Digital Freedom Declaration Presses EU For Clear Rules On Privacy Tech

Forbes

28-05-2025

Joachim Schwerin, principal economist at the European Commission in discussion with Judith De Boer, ... More Alexey Pertsev's lawyer
Launched in May 2025, the Digital Freedom Declaration is a coordinated push by civil society, technologists, and trade groups urging European lawmakers to adopt 'sound, proportionate regulation' that protects innovation in privacy-enhancing technologies (PETs) and gives developers the legal certainty they lack today. Backed by more than two dozen organisations and experts, including the European Blockchain Association, Blockchain for Europe, the European Crypto Initiative, and, from the U.S. side, the DeFi Education Fund and the Blockchain Association, the declaration argues that PETs are indispensable to Europe's digital sovereignty.
At the heart of the document is a plea for 'clear legal rules and procedures for developers and maintainers of privacy tools.' The declaration wants to foster an environment 'where emerging technologies can thrive and benefit everyone, trust in digital systems is strengthened, and data is safeguarded from cyber-threats and misuse', all while keeping the EU competitive on the global stage.
To protect innovation, digital freedom, and the rule of law, signatories call for investment in public education, clearer liability rules and a shift away from prosecuting the authors of open-source code for actions committed by third-party users.
Europe's policy landscape sends mixed signals. On one hand, the General Data Protection Regulation (GDPR) may require controllers to adopt privacy by design, an imperative many technologists interpret as a mandate to integrate PETs at the protocol layer. On the other, the new Anti-Money Laundering Regulation (AMLR) will, from 1 July 2027, ban crypto-asset service providers (CASPs) under direct EU supervision from engaging with privacy coins and anonymous crypto accounts. CASPs that continue to list tokens such as Monero or ZCash risk losing their licenses. The AMLR undercuts the GDPR's privacy-by-design principle and will push legitimate crypto privacy innovation off the continent.
Dr. Joachim Schwerin, a principal economist at the European Commission and signatory of the declaration, frames the issue starkly by stating that developers of PETs must never be liable for misuse once their tools are publicly available. Obfuscation techniques are a societal good he says, 'they provide an indispensable counterweight to excessive intrusion into personal data by public and private actors. Privacy enhancing technologies are essential to secure the digital rights of citizens and to guarantee the protection of business secrets and entrepreneurial freedom'.
The Tornado Cash prosecution by the Netherlands remains the industry's touchstone. In May 2024, a Dutch court sentenced Alexey Pertsev to 64 months for money-laundering, holding him responsible for how strangers used the open-source PET smart contracts that he developed. Pertsev is now free under electronic monitoring while he appeals.
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Lawmakers demand stronger privacy safeguards even as they criminalize some of the very tools that deliver them. Pertsev's counsel, Judith De Boer, views the Digital Freedom Declaration as a necessary corrective: 'Holding someone in the real world responsible for creating a neutral tool is unprecedented. A better understanding of DeFi and the role of privacy in our digital era is essential to avoid judgments that hold a developer liable for the risk that a tool can be misused by third parties. How much involvement can a developer keep with a project, what is the tipping point? We have faith in a just outcome on appeal'.
Literally: all of our on-chain data is there to be seen by everyone, through block explorer tools like Etherscan.
Bitcoin, Ethereum and most other public ledgers were initially designed without the inclusion of strong privacy guarantees. Once a wallet address, the equivalent of your on-chain identity, is linked to a state-given identity, often through a centralized exchange that performs know-your-customer checks, every historic transaction, counter-party graph and balance become visible. The more data is gathered, the more it can be inferred about an individual's behavior, preferences, and personality.
Blockchain pseudonymity is already an artifact of the past. Blockchain-analytics firms such as Chainalysis and Arkham Intelligence have built their trade around labeling wallets and selling deanonymization services. With artificial-intelligence tools accelerating pattern recognition, the amount of behavioral data that can be inferred from a single address is growing rapidly. For consumers and businesses alike, the reliance on 'pseudonymity' as a hedge against the lack of privacy is already fading; full-stack privacy solutions are becoming a prerequisite for using blockchains in sensitive contexts such as payroll, competitive supply chains or political donations, as well as in less sensitive contexts. The future of blockchain is tied to its privacy. Whether the EU plays a meaningful part in that future is yet to be seen.