• 13 July, 2024
News

EU Council’s Data Act Draft Hosts EU Smart Contract Regulations

Smart contracts would reportedly be required to host a “kill switch” as per the European Union’s (EU) revised Data Act published on Monday. The EU Council, representing national governments, reportedly gave its assent on the said text on Friday, whilst the proposals are already fairing well with the European Parliament lawmakers.

The European Commission is poised to act as the mediator in the forthcoming negotiations between the Parliament and the Council for the final text of the law. 

The native nature of smart contracts (being automated and immutable programs), now set to potentially change, is worrying the blockchain community. The proposed legislation would need the smart contracts to have a feature to altogether terminate their programmed activity. The development in question tends to undermine the decentralization aspect of cryptocurrencies.

Reportedly as per the Swedish minister chairing the council talks, Erik Slottner, the law is set to allow data to flow freely within the EU and across sectors for the benefit of businesses, researchers, public administrations, and society.

The fresh rules are applicable to contracts making available the data as a form of controls on smart-home appliances (viz. cars and fridges). But clarity is not yet provided on what is the actual reach of the said controls.

Luke Lombe, Core Builder, Spool DAO, said, The DeFi ecosystem is sounding the alarm bells over the EU’s recent ‘kill switch’ mandate for good reason, it raises concerns about the immutability of smart contracts and the potential risks it may pose to the safety and security of the industry.

But Marina Markezic, founder, the European Crypto Initiative, flagged the hardship that a majority of the smart contracts would face in complying with the Parliament’s regulations.

A senior commission official for digital aspects, Thierry Breton, is reportedly not impressed by the lawmakers’ draft regulations. He believes the said draft represses the ability to establish smart contracts’ standards.

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