Key Highlights
- The European Parliament’s recent approval of the Data Act introduces a groundbreaking provision requiring smart contracts to include “kill switches”. A move awaiting final validation from the European Council.
- Critics express concerns over the Act’s broad definition of smart contract termination, arguing that it lacks clarity on when interruptions or terminations should occur. As highlighted in a June open letter by EU blockchain advocacy bodies and numerous crypto firms.
- As the Data Act progresses, questions arise about its potential impact on blockchain technology. Emphasizing the delicate balance between regulation and innovation, with the legislation aiming to address data utilization concerns without stifling the growth of emerging technologies.
The European Parliament’s recent approval of the EU Data Act, a legislation encompassing a provision for the termination of smart contracts. Marks a significant development in the regulatory landscape. However, this controversial move, which requires smart contracts to be equipped with “kill switches,” awaits approval from the European Council to become law.
Parliamentary Approval and Next Steps
In a press release on November 9, the parliament announced that the legislation passed with a resounding 481 votes in favor and 31 against. Consequently, the next crucial step involves securing approval from the European Council. Comprising the heads of each of the 27 European Union member states.
The adopted Data Act introduces a crucial stipulation mandating that smart contracts “can be interrupted and terminated.” Furthermore, it outlines controls enabling functions that reset or halt the contract. At its core, this legislative move aims to empower users to access data generated from smart devices. Addressing the European Commission’s claim that a staggering 80% of such data remains unused.
Criticism and Concerns
However, critics of the Act express concerns about the broad definition of the smart contract clause. They argue that it lacks clarity regarding when interruptions or terminations should occur. In a June open letter, EU blockchain advocacy bodies, along with numerous crypto firms, highlighted potential issues. They suggested that smart contracts utilizing data from public blockchains. Such as Ethereum, could be deemed in breach of the law.
In response to these concerns, the European Commission has clarified that the Data Act is not specifically concerned with blockchain. The commission dismisses fears that the act would render smart contracts illegal as unfounded.
Balancing Act for Blockchain
While the Data Act moves forward, questions linger about its potential impact on blockchain technology. The delicate balance between regulation and innovation remains a focal point. The legislation seeks to address concerns surrounding data utilization. While ensuring it doesn’t stifle the growth and potential of emerging technologies.
Conclusion
As the Data Act progresses through the legislative pipeline, its implications for smart contracts and blockchain technology will undoubtedly shape discussions in the crypto community. Stay tuned for updates on this evolving regulatory landscape, where the intersection of innovation and governance takes center stage.
Disclaimer
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