On March 14th, the European Parliament passed the Data Act, which includes provisions for managing smart contracts deployed on blockchains. The legislation received 500 votes in favor and 23 votes against, indicating broad support for the measure.
Under the Data Act, smart contracts must include a “reset” button to halt transactions when necessary. The law does not specifically target cryptocurrency companies or projects but aims to manage data flows between digital devices. However, some worry that the vague language in the law could harm the development of the crypto industry in Europe.
Article 30 of the Data Act outlines “necessary requirements for sharing data related to smart contracts.” This provision calls for smart contracts to have a “strict access control mechanism” that can block or terminate transactions upon request.
Smart contracts will also receive “the same level of protection and legal status as contracts established in other fields.” Natalie Linart, legal advisor for ConsenSys, the infrastructure company behind the MetaMask wallet, believes that Article 30 of the Data Act will not have a significant impact on the crypto industry.
“We see Article 30 as only applying to data-circulating smart contracts for Internet of Things products, rather than DeFi applications,” Linart said.
However, some worry that the scope of the regulation may expand in future revisions, limiting the potential for blockchain innovation and making the EU less attractive to developers.
The legislation will now be discussed between the European Parliament, the European Commission, and the Council of the European Union before becoming law. It remains to be seen how the legislation will be implemented and how it will affect the development of the blockchain industry in Europe.
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