European Parliament approves regulation on smart contracts

Provisions in European regulations require smart contract implementers to have a “reset” button to block transactions when necessary.

European Parliament approves regulation on smart contracts

The European Parliament on March 14 passed the Data Act, which regulates the management of smart contracts deployed on the blockchain, with 500 votes in favor and 23 against.

The Data Act is not directly aimed at crypto companies or projects, but instead wants to manage the flow of data between digital devices. Even so, there have been concerns that if not clearly defined, the provisions contained in the law will threaten the development prospects of the crypto industry in Europe.

Accordingly, smart contracts are mentioned in Article 30 of the Act, which sets out “necessary requirements for data sharing related to smart contracts”.

This clause wants smart contracts to have “strict access control mechanisms”, with the ability to block or terminate transactions when required.

Smart contracts also receive “the same level of protection and legality as contracts established in other areas.”

Natalie Linart, legal counsel for the crypto infrastructure firm ConsenSys – which is behind the MetaMask wallet – believes that Article 30 of the Data Act does not have much of an impact on the crypto industry.

“We found Article 30 only applies to smart contracts that circulate data for Internet-of-Things products, not DeFi applications.

However, it is hoped that the scope of application of the regulation will not cover the entire smart contract in future revisions. Placing strict requirements on blockchain development will limit the potential for progress and make the EU unattractive to programmers.”

The bill, which will be discussed between the European Parliament, the European Commission and the Council of the European Union, must be agreed upon by these organizations to become law.

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