Know Your Contract: Extending eIDAS Trust into Public Blockchains
Awid Vaziry, Christoph Wronka, Sandro Rodriguez Garzon, Axel Küpper
TL;DR
The paper tackles the attribution gap in public blockchains by proposing an architecture that binds smart contracts to EU eIDAS trust anchors through Qualified Electronic Seals issued by QTSPs, creating a verifiable chain from the LOTL to on-chain addresses. It introduces two complementary validation models—off-chain trust workflows for agent payments and on-chain trust validation for DeFi—to enable regulatory-compliant interactions without new intermediaries. A cryptographic suite aligned with eIDAS requirements, including ECDSA with P-256 and CAdES formatting, is selected and made compatible with the Ethereum Fusaka upgrade, with on-chain LOTL mirroring or other trust-anchor strategies discussed. The approach aims to unlock institutional DeFi participation and real-world asset tokenization by embedding legally meaningful identity into blockchain systems, aligning with forthcoming EU wallet ecosystems and the European Business Wallet, while outlining standardization and privacy challenges ahead.
Abstract
Public blockchains lack native mechanisms to attribute on-chain actions to legally accountable entities, creating a fundamental barrier to institutional adoption and regulatory compliance. This paper presents an architecture that extends the European Union eIDAS trust framework into public blockchain ecosystems by cryptographically binding smart contracts to qualified electronic seals issued by Qualified Trust Service Providers. The mechanism establishes a verifiable chain of trust from the European Commission List of Trusted Lists to individual on-chain addresses, enabling machine-verifiable proofs for automated regulatory validation, such as Know Your Contract, Counterparty, and Business checks, without introducing new trusted intermediaries. Regulatory requirements arising from eIDAS, MiCA, PSD2, PSR, and the proposed European Business Wallet are analyzed, and a cryptographic suite meeting both eIDAS implementing regulations and EVM execution constraints following the Ethereum Fusaka upgrade is identified, namely ECDSA with P-256 and CAdES formatting. Two complementary trust validation models are presented: an off-chain workflow for agent-to-agent payment protocols and a fully on-chain workflow enabling regulatory-compliant DeFi operations between legal entities. The on-chain model converts regulatory compliance from a per-counterparty administrative burden into an automated, standardized process, enabling mutual validation at first interaction without prior business relationships. As eIDAS wallets become mandatory across EU member states, the proposed architecture provides a pathway for integrating European digital trust infrastructure into blockchain-based systems, enabling institutional DeFi participation, real-world asset tokenization, and agentic commerce within a trusted, regulatory-compliant framework.