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- The European Union (EU) New Data Act is a source of great concern for crypto industry leaders.
- The text of the Act may streamline innovation according to certain concerns
A close look at the latest release of the new European Union Data Act reveals that the appeal of the blockchain industry may have successfully been ignored. Several protocols worry that the new Data Act contains an off switch that may potentially render most smart contracts unlawful.
According to a Coindesk report, “provision intended to ensure automated data-sharing agreements contain a kill switch under which they can be safely terminated still refers broadly to ‘smart contracts,’ and aren’t limited to privately owned and permissioned data records as lobbyists hoped.”
EU negotiators claimed to have inked an agreement on the controversial text on June 28th. This was shortly after several organizations or stakeholders in the blockchain ecosystem like Stellar, Polygon, NEAR, and Cardano, communicated their skepticism in an open letter to which no details of the content were revealed until the time of the Coindesk publication. According to the details gleaned, the New Data Act still acknowledged the “smart contracts” designation instead of “digital contracts” which the industry prefers.
At the same time, the text of the law places responsibilities on vendors of the automated programs and this raises concern in the minds of industry advocates. They are very concerned about the potential imposition of perpetual and limitless liabilities in decentralized scenarios where there is no single seller.
Despite these numerous buts, it is worth noting that the text has been revised from the European Commission’s original proposal in February 2022.
Now it says that the rule is only applicable in the case of “automated execution” of data-sharing agreements likely to be found in smart devices like connected cars and fridges. Ultimately, the scope still looks bigger than what lobbyists requested as it does not apply to private and permissioned networks.
EU Data Act: Signatories Express Disappointment
The EU Data Act which was earlier distributed to the members of governments of the bloc confirms that the law was “updated according to the provisional political agreement reached” at a June 27 meeting. The text claimed that they “came to an agreement on all political issues and successfully closed the negotiations” in talks with lawmakers at the European Parliament.
In response, signatories to the open letter have expressed their disappointment and regret at the fact that the publication still uses the term “smart contracts” instead of digital contracts, citing that the distinction between the two terms is important. They believe that the plans will not work and would end up frustrating the sole purpose of permissionless networks, which is to have no centralized control.
In the meantime, the text is yet to be passed into law as it would still require the formal agreement of the parliament and of the member states that form a Council of the EU.
