EU negotiators have finalized controversial rules regarding smart contract kill-switches.

Legislative negotiators from the European Union have agreed on new rules known as the Data Act – after the Web3 community raised fears that its provisions on smart contracts could kill the sector.

The plans – made as part of a wider overhaul of data rules governing internet-connected appliances – have caused consternation in the Web3 sector for their vague scope and potentially fatal impact on decentralized transactions governed by immutable code.

The deal was confirmed by the European Commission’s Thierry Breton in a tweet sent late overnight between Tuesday and Wednesday European time. The legislation is a “milestone in reshaping the digital space” that will lead to a “thriving data economy that is innovative & open — on our conditions,” said Breton, who is Commissioner for the EU’s internal market.

While no final legal draft of the deal has yet been released, negotiators have told blockchain that the text on smart contracts was tightened up from original plans, which are intended to give people more rights over any data produced about them.

“With the adjustments made to the text 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,” Damian Boeselager, a lawmaker who led negotiations for the European Parliament’s Green grouping, told blockchain.

That suggests some improvements to a proposal the European Commission made in 2022, which said automated programs linked to the exchange of data should include kill switches that allow them to be safely terminated.

But another source briefed on the talks told blockchain that the final agreed version of the law still refers to “smart contracts,” rather than alternative formulations proposed by the industry such as “digital contracts.”

The commission has brushed off blockchain industry fears, saying the new law won’t kill off existing smart contracts , and that the high-level requirements it contains shouldn’t be problematic for vendors in practice.

But it’s not clear that the final deal will assuage concerns that the measures will prove unworkable for public, permissionless blockchains, where there’s no central actor to implement regulatory strictures.

A recent open letter signed by organizations linked to numerous blockchains, including Stellar, Polygon , NEAR and Cardano , argued the Data Act could conflict with the recently agreed Markets in Crypto Assets (MiCA) regulation.

MiCA, set to take effect in 2024, offers a license to crypto exchanges and wallet providers to operate across the bloc, but policymakers deliberately left out the more complicated topic of how to regulate decentralized finance, which the commission will have to return to in a few years’ time.

For the Data Act to pass into law, the European Parliament and Council, representing the bloc’s 27 member states, must vote in favor of the text agreed by negotiators.

Edited by Sandali Handagama.

We will continue to update Phone&Auto; if you have any questions or suggestions, please contact us!

Share:

Was this article helpful?

93 out of 132 found this helpful

Discover more

Market

Bitcoin Hits $388K - To the Moon and Beyond!

Get the Scoop on the Latest Crypto Market Price Changes for Dec. 7, 2023!

BlockChain

Blockchain Transaction Integrity: Trust Through Audits

Auditing is an important practice in the blockchain industry. While it is ideal for all projects to have their entire...

Policy

House Ag Committee considers digital assets bill, Dems inquire about funding.

The entire Agricultural Committee of the U.S. House of Representatives listened to statements regarding the Thompson-...

Policy

Australian Crypto Exchanges Applaud New Regulations, with Some Concerns

Australian fashion leaders express mixed emotions regarding the Treasury's proposed crypto regulations, but all agree...

BlockChain

Deloitte and Chainalysis team up to empower law enforcement in the crypto industry

Leading professional services firm Deloitte has partnered with Chainalysis, a renowned blockchain analytics service, ...

Bitcoin

Black Swan author warns of Bitcoin volume slump as BTC fails to breach $30,000.

Bitcoin appears poised for potential upward movement in today's trading session, as long as bulls manage to maintain ...