Translating Privacy Law into Digital Architecture

As states modernize public services, privacy must move from principle to practice. Laws define what to protect, but it’s technology that enforces how. Embedding statutory safeguards, such as unlinkability, data minimization, and selective disclosure, directly into the architecture is critical to making privacy protection real and reliable. In this blog post, we explore recommendations around translating privacy law into digital architecture.

Compliance by Design

Compliance with a state’s privacy statutes should be embedded directly into the design and governance of state digital identity, ensuring that protections are enforced through both technology and policy.

One approach is to use personal data licenses, where every credential presentation carries machine-readable terms that specify how the data may be used, for how long it may be retained, and whether it may be shared. Wallets can enforce these licenses automatically, creating automated privacy compliance that is consistent with statutory requirements and reducing reliance on after-the-fact enforcement.

Establishing Reasonable Disclosure Norms

States could also establish the principle of reasonable disclosure, defining contextual norms for when certain attributes may be shared. For example, in a bar setting, presenting “over 21” is a reasonable disclosure, but if the bar requests an email address, that exceeds the scope of the transaction and must be flagged or presented differently. 

An insurance company might ask for someone’s basic history, but additionally requesting genetic indicators of future disease may be considered unlawful or predatory. Embedding these rules into wallet UX and verifier obligations ensures that disclosures remain consistent with a state’s privacy laws while still supporting legitimate use cases.

Governance and Decentralized Enforcement

It is a very difficult but important task to determine the proper governance around agreeing upon “reasonable disclosure” across many different industry use cases. We believe that one entity would not be able to make good judgements across all industry verticals, and so industry engagement is critical for this to be successful. 

Further, it remains unclear if a government agency is the best entity to coordinate these efforts, versus non-profits, cooperatives, or even private companies specializing in digital reputation management. This is a hard and open problem in decentralized identity, but necessary to create the benefits while managing the risks of increased user control.

Balancing User Autonomy and System Safety

It’s our opinion that this should operate in a decentralized manner, with wallets mediating requests and issuers not serving as intermediaries for every transaction. We believe that enforcement of these reasonable disclosure frameworks should be composable across many different sources and list maintainers, and ultimately configured at the wallet level. 

We should “push decision-making towards the edges” as much as possible, while ensuring reasonable defaults which provide an acceptable trade-off between user choice and safety.

Incentivizing Privacy by Design

To further protect residents, states could consider imposing an insurance requirement on verifiers or entities that retain personally identifiable information (PII). This creates a financial incentive to minimize data collection and retention, while ensuring that residents are protected if breaches occur. 

States could also consider strongly restricting the appropriate request criteria, which would transmit PII and result in full identification. Finally it would also be possible for wallet providers to align on a privacy-preserving fraud signal mechanism, where relying parties overcollecting data are detected via anonymized aggregated reporting so that investigations and enforcement can take suitable action.

Putting Privacy Law Into Action

Translating privacy law into digital architecture is both a technical and civic responsibility. It demonstrates how statutory principles, such as unlinkability, minimal disclosure, and individual control, can be implemented in real systems. When wallets enforce policy through personal data licenses and reasonable disclosure frameworks, compliance becomes built-in and verifiable.

By embedding privacy into the core architecture, governments and institutions can establish a new standard for privacy-by-design governance that protects individuals and fosters confidence in digital services. SpruceID enables governments and organizations to turn privacy principles into secure, trusted digital systems. To learn more, contact our team.

About SpruceID: SpruceID is building a future where users control their identity and data across all digital interactions. We build privacy-preserving digital identity infrastructure that empowers people and organizations to control their data. Governments, financial institutions, and enterprises use SpruceID’s technology to issue, verify, and manage digital credentials based on open standards.