Advancing Digital Trade 2025

Establish recognition frameworks for digital identity The testing by Empeiria and IOTA revealed that digital identity technologies can create trust in cross-border transactions but currently lack formal legal recognition. Empeiria demonstrated how verifiable product credentials could serve as collateral, while IOTA showed how government- validated trade data could streamline financing. While technically feasible, implementation raises critical governance questions. The decentralized nature of identity solutions challenges traditional trust hierarchies. Regulators must determine who bears liability for credential issuance, how on-chain verification aligns with AML/KYC obligations and how to manage cross-border credential recognition without undermining national security or data protection laws.Authorities can improve identity frameworks by: –Updating e-signature and identity laws to explicitly recognize decentralized identifiers and verifiable credentials –Creating interoperable standards for cross- border identity verification that align with international frameworks (e.g. GLIEF vLEI, W3C standards) –Developing guidelines for how digital credentials can satisfy KYC/AML requirements while preserving commercial confidentiality A robust digital identity framework would enable automated compliance checks, reduce duplicative verification processes and create new opportunities for SMEs to establish trusted relationships with international counterparties.5.2 Identity and trust systems Identity and trust systems FIGURE 2 Source: World Economic ForumUpdated e-signatur eand identity laws toexplicitly recognize decentralized identifiers andverifiable credentialsInteroperable standar ds forcross-bor deridentity verification aligning with international frameworks Guidelines forhow digital credentials cansatisfy KYC/AML requir ements while preserving commer cialconfidentialityAutomated compliance checks Reduced duplicate processes New opportunities forSMEsImproved digital identity framework 001020001 Advancing Digital Trade: Insights from the UAE TradeTech Regulatory Sandbox 24