The Birth of the vLEI: A New Dawn in Digital ID for Legal Entities Everywhere
Stephan Wolf, CEO, GLEIF, reviews the rapid progress made by GLEIF and its partners to create a standardized and independent service enabling every legal entity in the world to digitally confirm its authenticity
Author: Stephan Wolf
For businesses the world over, confidence in digital authenticity is in short supply. Can you be sure that your bank’s website is not an elaborate phishing recreation? Did that e-invoice really come from your business partner? How can you tell?
As businesses increasingly cooperate and transact remotely and across borders, the systems they use to establish trust also need to evolve.
GLEIF has been working to address this requirement directly, by extending the Global LEI System to incorporate a ‘verifiable LEI’ (vLEI) a standardized, digitized version of the LEI capable of enabling instant, automated trust between legal entities and their authorized representatives, and the counterparty legal entities and representatives with which they interact.
To trust in the future, the business world needs the LEI
Under GLEIF’s stewardship, the Global LEI System has, for years, been providing open and reliable data enabling the unambiguous identification of legal entities around the world. With over two million LEIs now in use, GLEIF is now taking steps to build on its success by driving voluntary LEI adoption among legal entities across all industries globally, to establish the LEI as the world’s de-facto system of organizational identity.
Helping legal entities to participate efficiently in the world’s digital economy is central to this goal. But it’s a dangerous world out there, and things are moving fast. In 2021 alone, cybercrime cost the global economy an estimated $6 trillion. New business models and newly automated processes are springing up all the time, fueled by myriad advances in technology, from APIs, to blockchain, to IoT.
Against this backdrop it’s easy to see why digital trust between legal entities is scarce. Yet this is precisely what is needed: when legal entities digitally engage with their customers, partners, and suppliers, they must be able to trust that these organizations are, indeed, who they claim to be.
The creation of digitized trust, therefore, is central to GLEIF’s ongoing work. We believe that each legal entity worldwide should have just one global identity, capable of supporting its participation in the digital economy. Only then can everyone work together in ways that will unlock the true potential of digitalization: enabling innovation and collaboration to thrive unlimited by geography, and money, goods, and services to flow securely around the world faster, more efficiently, and at a lower cost than ever before.
A new digital trust ecosystem for legal entities everywhere
GLEIF has been working to extend the Global LEI System to address this requirement directly. Our work began by engaging with existing systems that enable digital trust by, for example, standardizing the way in which a legal entity’s LEI code could be embedded in digital certificates.
In parallel, we also sought out next-gen technologies that could be developed to create a new system.
In early 2020, the idea to create a digitally verifiable version of the LEI - the vLEI - was born. Its concept was simple: to enable a legal entity to leverage its LEI to establish instant, digitized trust with counterparty organizations and their representatives.
Move fast and create things
By December 2020, a series of research initiatives had confirmed demand from the pharmaceutical, healthcare, telecom, financial services and automotive sectors, and prompted GLEIF to launch an international, cross-industry development program. The program’s objective was to create an ecosystem and credential governance framework, together with a technical supporting infrastructure, for the vLEI.
Three months later, in February 2021, GLEIF unveiled its models for the vLEI’s technical infrastructure and issuance process, outlining how a legal entity’s LEI code would be wrapped in Verifiable Credentials and issued by GLEIF, via a network of qualified vLEI issuers, to legal entities. The infrastructure establishes GLEIF as the digital ‘root of trust’ that safeguards the integrity of the vLEI trust chain. This means all vLEIs are traceable, through a cryptographically protected chain of credentials, back to their source LEI record in the Global LEI Index.
GLEIF also recognized that universal adoption by legal entities required the vLEI system to interoperate seamlessly and securely with all technology models, including blockchains, cloud services and APIs. To accomplish this, GLEIF adopted a ‘network of networks’ approach enabled by the Key Event Receipt Infrastructure (KERI) protocol.
Using KERI, vLEIs can be created and utilized independently of any specific organization, with the highest levels of security, privacy, and ease of use. KERI also enables GLEIF and the vLEI trust ecosystem to operate under GLEIF’s governance framework, unencumbered by the governance of external systems, including those of blockchains and distributed ledger consortia.
Curious about KERI? Check out our explainer video below.
A busy year ahead: Software, governance, standardization, and field trials
2022 is already alive with vLEI activity.
In February, GLEIF has published the vLEI Ecosystem Governance Framework, in full accordance with the standards and recommendations of the Trust Over IP Foundation (hosted by the Linux Foundation). The Framework, which has been designed from the ground up to complement GLEIF’s existing LEI governance, defines the vLEI operational model and describes how the new ecosystem’s range of vLEI issuing stakeholders will qualify for and perform their roles in the Global LEI System. It provides essential detail on the governance structures and processes that will shape the development of the vLEI ecosystem together with the services that GLEIF will provide.
Also in in 2022, after a year in development and sandbox testing, the open-source vLEI beta software will enter field trials in a variety of vertical industry applications. The software will deliver functionality supporting the issuance, presentation, and revocation of the vLEI’s Verifiable Credentials, and provides secure key management using the KERI protocol.
Lastly, GLEIF’s standardization work with the ISO/TC 68/SC 8 Committee is also approaching completion, with an international standard (ISO 5009) for defining official organizational roles in financial services reference data currently ‘under publication’. Once launched, the ISO 5009 standard will permit global uniformity of the listing of official organizational roles in a structured way, so they may be specified by a legal entity and incorporated into its vLEI official organizational role credentials. Similarly, the standard will also enable organizational roles to be referenced uniformly and embedded in other digital assets leveraging the LEI, such as digital certificates, now and in the future.
A bright future
The vLEI has the potential to become one of the most valuable digital credentials in the world; it is designed to become the hallmark of authenticity for any legal entity, anywhere. This new family of digital credentials can serve as a chain of trust for anyone needing to verify the legal identity of an organization or of a person legally acting on that organization’s behalf. It changes the game in digital organizational identity and will represent a sea change in digital trust that will benefit every country, company, and, ultimately, citizen in the world.
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Stephan Wolf is the CEO of the Global Legal Entity Identifier Foundation (GLEIF). In 2021, he was appointed to an all-new Industry Advisory Board (IAB) as part of the International Chamber of Commerce’s (ICC) Digital Standards Initiative (DSI). In that capacity, he serves as co-chair of the workstream on ‚Trusted Technology Environment‘. Between January 2017 and June 2020, Mr. Wolf was Co-convener of the International Organization for Standardization Technical Committee 68 FinTech Technical Advisory Group (ISO TC 68 FinTech TAG). In January 2017, Mr. Wolf was named one of the Top 100 Leaders in Identity by One World Identity. He has extensive experience in establishing data operations and global implementation strategy. He has led the advancement of key business and product development strategies throughout his career. Mr. Wolf co-founded IS Innovative Software GmbH in 1989 and served first as its managing director. He was later named spokesman of the executive board of its successor IS.Teledata AG. This company ultimately became part of Interactive Data Corporation where Mr. Wolf held the role of CTO. Mr. Wolf holds a university degree in business administration from J. W. Goethe University, Frankfurt am Main.