The European Parliament said on November 9 that it has voted in favor of a Data Act that will set rules in several areas, including the development of smart contracts.
The current announcement states that the law was adopted with 481 votes in favor to 31 votes against, and 71 abstentions. The law must now be formally approved by the European Council before it can become law.
The current press release does not describe the possible effects of the Data Act on the blockchain sector. However, the Data Act itself sets out several “essential requirements relating to smart contracts for data sharing” in Article 30 of the text.
Smart contract rules are controversial
Certain members of the crypto industry have objected to the Data Act’s potentially sweeping requirements. For example, the European Crypto Initiative (ECI) has argued that the law could make developers and operators of smart contracts responsible for complying with requirements even if they have no means to do so.
It has also criticized the Data Act’s demand for a way to securely terminate or pause smart contracts – a requirement that has been described elsewhere as a ‘kill switch’. The ECI said blockchain-based smart contracts are designed to prevent the possibility of termination, noting that any way to terminate a contract would introduce a single point of failure and increase exploit risks. Likewise, it objected to any rule that would prevent developers from creating immutable smart contracts.
Moreover, it objected to a part of the law that seemingly establishes an equivalence between smart contracts and legal contracts, and a part that would require smart contracts to process data in accordance with rules around the protection of trade secrets.
Despite the extensive rules that the Data Act could eventually introduce, it is unclear how EU government agencies can enforce these rules. Either way, overly strict rules could push European blockchain companies to move.
The post that the European Parliament passes the controversial Data Act, which may require ‘kill switches’ on smart contracts, first appeared on CryptoSlate.