Legislators in the European Union or EU have reached a consensus on its new contentious Data Act touted to be a “milestone in reshaping the digital space”
The agreement was confirmed by Thierry Breton, the European Commissioner for the Internal Market, who also noted that the legislation will open the door to a vibrant data economy that is innovative and accepting of its constraints.
Crypto proponents, however, strongly disagree and have expressed worries that the provisions on smart contracts could end up killing the industry.
A specific clause in the act called Article 30 mandates a built-in feature to stop or interrupt transactions, which the industry argued eliminated the permissionless, autonomous, and automatic nature of smart contracts.
But Damian Boeselager, EU negotiator said, “We are no longer addressing smart contracts in general but make this regulation applicable specifically to the execution of contractual clauses in the context of data sharing.”
The commission also brushed off blockchain industry fears, claiming that the new rule won’t invalidate already-existing smart contracts and that its stringent standards shouldn’t pose a practical challenge for suppliers.
However, this hasn’t done much to allay industry worries. Stellar blockchain CEO Denelle Dixon wrote,
In the EU’s push to lead technology regulation, we have seen misfires with overly broad language and unintended impacts before. Unfortunately, the Data Act has the potential to fall into this same trap, effectively regulating smart contracts out of existence.
“The Act could impose unworkable requirements on smart contracts–including mandatory termination and interruption features,” Dixon added.
EU’s Data Act: The Road Ahead
After the successful negotiations, the Data Act will be examined by legal experts over the summer and may be approved by a final vote by September.
According to a source, if it becomes legalized, smart contracts would need to have the option to be turned off, and protocols that ensure transactions might not be able to exist.
Meanwhile, decentralized protocol Stellar has joined industry colleagues to raise the flag in a letter to EU policymakers ahead of tomorrow’s trialogue negotiations.