Data Minimization

Data minimization is a core privacy principle mandated by GDPR Article 5(1)(c) requiring that personal data collection be adequate, relevant, and limited to what is necessary for the specified processing purposes, prohibiting excessive or unnecessary data gathering.

Organizations must collect only the minimum personal data required to accomplish legitimate business objectives, avoiding speculative data collection for potential future uses. This principle extends to data retention, requiring deletion when data is no longer necessary for its original purpose. Data minimization applies throughout the data lifecycle from initial collection through processing, storage, and eventual deletion.

In crypto compliance, data minimization creates tension with extensive KYC and transaction monitoring requirements. While VASPs must collect customer identification and beneficial ownership information under AML regulations, GDPR requires limiting collection to what is strictly necessary and avoiding indefinite retention. Zero-knowledge proofs and selective disclosure technologies enable data minimization by allowing verification of attributes without collecting underlying documents. The EU's EUDI Wallet framework implements data minimization by enabling users to prove age, residency, or credentials without sharing full identity documents or unnecessary personal details, reconciling compliance obligations with privacy protection in digital asset onboarding and ongoing monitoring.