The European Parliament has approved the Data Act, including a “kill switch” clause for smart contracts.
The law requires smart contracts to be interruptible or terminable, raising concerns among critics.
The European Council must now validate the Act for it to become law.
Adoption of the Data Act by the EU
The European Parliament has taken a significant step by approving the Data Act, legislation that imposes the possibility of interrupting or cancelling smart contracts. With a vote of 481 in favor and only 31 against, this controversial law now awaits validation from the European Council to be put into effect.
Requirements and Controls of Smart Contracts
The adopted legislation clearly specifies that smart contracts must incorporate mechanisms to interrupt or reset. This provision aims to ensure control and security in the use of smart contracts in various sectors, particularly in the management of data generated by smart devices. The true question still lies in the technical feasibility of such a mechanism.
Debates and Criticisms surrounding the Act
While the Data Act primarily aims to allow users access to the data they generate, the clause on smart contracts has raised criticism. Opponents of the law highlight the lack of precision regarding the conditions for interrupting or cancelling contracts. A June open letter signed by several blockchain industry stakeholders expresses concern that contracts using public blockchain data may be deemed non-compliant with this new law.
Nevertheless, the European Commission assures that the Data Act does not directly target blockchain technology and that fears of a smart contract ban are unfounded. The upcoming validation steps will be crucial in determining the real impact of this legislation on the smart contract and blockchain ecosystems in Europe.
