Worldcoin Faces Regulatory Challenges Amid Tech Partnerships

Despite regulatory scrutiny and privacy concerns, Worldcoin, the startup scanning irises for digital identities and crypto distribution, remains ambitious. Facing probes and bans, the team seeks partnerships with tech giants like OpenAI, believing their "proof of personhood" system distinguishes humans from AI creations online. Tools for Humanity, Worldcoin's parent company, is also upgrading its scanning orbs and broadening its terminology, moving away from the politically charged "universal basic income" towards "distribution of scarce resources."

Worldcoin: Regulatory Challenges and Tech Team-Ups Amid Quest for Digital Identity

Worldcoin, the ambitious project that seeks to provide individuals with a digital identity and crypto tokens through iris scans, has faced a series of regulatory setbacks in recent months. Despite these challenges, the group remains undeterred, aiming to forge partnerships with tech giants like OpenAI.

Regulatory Scrutiny Casts Shadow over Worldcoin

Tools for Humanity, the company behind Worldcoin, has been the subject of investigations in Germany and Argentina, a ban in Kenya, and allegations of non-compliance in Spain and Portugal. Authorities in the latter countries alleged that children were permitted to undergo eye scans and obtain blockchain-based identities known as World IDs, prompting orders to cease data collection. Furthermore, Worldcoin's token, traded under the ticker WLD, is not available to market participants in the United States due to regulatory concerns.

Alex Blania, CEO of Tools for Humanity, attributes the scrutiny partly to the high profile of his co-founder, Sam Altman. "I think it's just because of Sam," Blania told Bloomberg News. "Just, like, much more attention than you would usually face as a company of that size or a project of that size."

Altman's OpenAI, known for creating ChatGPT, boasts a valuation of $86 billion following a recent deal. Blania emphasizes that Tools for Humanity has engaged proactively in discussions with regulators, but declined to elaborate on any potential positive developments in this regard. Notably, he met with representatives of Malaysia's digital ministry, as mentioned in a post on the social media platform X.

Addressing Regulatory Concerns

In response to concerns raised by regulators in Spain and Portugal, Blania asserts that the company is implementing modifications to ensure compliance. Previously, Worldcoin utilized an age verification feature embedded within the "orb" device used for scanning, which was designed to indicate if an individual was too young to be registered. However, the company has since introduced an identity document verification process and allows users of its app, which boasts over 10 million users, to request the removal of their World IDs.

Tech Team-Ups and Partnerships

Despite the regulatory challenges, Tools for Humanity is forging ahead with partnerships with prominent players in tech and finance. Last year, the project collaborated with cybersecurity firm Okta Inc. on a "sign in with Worldcoin" authentication service, an alternative or addition to similar offerings by Apple Inc. and Google.

Blania and Altman maintain that Worldcoin's identity system offers "proof of personhood," distinguishing humans on the internet from bots such as ChatGPT. Blania highlights the growing significance of validating an individual's authenticity in the wake of AI advancements.

"With the progress of AI, all the things that, we thought, would happen, I think happened much faster than even we expected," he said.

While Blania hinted at a potential collaboration with OpenAI, he declined to provide specific details. "There's some natural things in how we might and will work together," he said. "But it's nothing that we're ready to announce yet."

Altman's involvement with Tools for Humanity has increased since the launch of the WLD token last July, according to Blania. Altman contributes to hiring and the development of the company's strategy and vision, while still prioritizing OpenAI. OpenAI did not respond to requests for comment.

Blania also revealed that Tools for Humanity has had discussions with payments company PayPal Holdings Inc., but emphasized that no "concrete" developments have emerged. A PayPal spokesperson declined to comment on rumors or speculation.

Product Evolution and Strategy Shifts

Tools for Humanity plans to introduce a layer-2 blockchain called World Chain and is exploring upgrades to its orb device, including introducing different colors and launching additional orbs in various global locations. Blania explains that the current orb model is a prototype that was not intended for the market.

"Sam was like, 'Let's launch faster,'" he said. "'Let's just get it out.'"

The project is also distancing itself from the term "universal basic income," which had been a personal passion for Altman. Initially positioned as a means to distribute payments in certain markets, the project drew criticism for its labor practices as it scanned people in exchange for compensation in countries such as Indonesia, Kenya, Sudan, Ghana, and Chile.

Blania prefers the term "distribution of scarce resources," arguing that "UBI is a very politically loaded term" with "communistic" connotations. He also broadens the scope to include resources beyond money, such as computing power used for training AI models.

Funding and Future Prospects

While Tools for Humanity actively seeks talent to join its 200-person team, Blania expresses uncertainty about tapping the crypto market for funding. The company raised $115 million last year, but a planned token sale with a target of $50 million was abandoned due to market fluctuations.

Crypto media company The Block reported that the deal would have valued the WLD token at $1 each, a significant discount to its spot price of $2.50 at the time.

"The token price shot up so drastically," Blania said. "We were like this doesn't sound like a good deal anymore." WLD has rallied along with the broader crypto market this year, reaching an all-time high near $12 in March.

Blania acknowledges that the company is working to increase comfort with eyeball scans among potential users and regulators, citing the example of Apple's Vision Pro goggles that employ "Optic ID" iris recognition as a step towards mainstream adoption.

However, he concedes that Tools for Humanity's status as a startup may necessitate different considerations. "We are not Apple, so we actually need to earn our trust."