The episode unpacks the European Blockchain Sandbox as a testing ground for compliance and innovation, where regulators and innovators collaborate on digital identity use cases. Guests Alex Tweeddale (cheqd) and Tom Jansson (IOTA Foundation) discuss tokenized KYC for self-hosted wallets, trust registries under eIDAS 2.0, and the principle of keeping personal data off-chain for GDPR compliance. They explore how decentralized systems can meet AML and law enforcement requirements while future-proofing against quantum risks, and emphasize the need for interoperability to bridge fragmented “digital islands” of identity.