European Union’s new Data Act has been published. It is a proposal for a law that regulates the handling and generation of data by those who harness it. In its vast scope, the act touches upon smart contracts. It proposes that all smart contracts should include a termination function in order to block transactions from occurring when necessary.
EU Data Act Could Stifle Smart Contracts
Newly proposed EU Data ActPublished on February 23, the document aims regulate and control data production, providing legal certainty to Europe’s data markets. A press release, the new Data act seeks to “ensure fairness in the digital environment, stimulate a competitive data market, open opportunities for data-driven innovation and make data more accessible for all.”
This new law has a large impact on smart contracts. These are software pieces that can execute tasks using data inputs. The document, in its article 30, titled “essential requirements regarding smart contracts for data sharing,” defines the requirements that smart contracts must fulfill to be deployed in conformity with EU laws.
One of these requirements, called “safe termination and interruption,” states that approved smart contracts shall:
…include internal functions which can reset or instruct the contract to stop or interrupt the operation to avoid future (accidental) executions.
Smart contracts must also be approved by the EU. The software should allow for audits of contracts.
Some analysts were not happy with the proposals for smart contracts that could be interrupted and to standardize smart contracts according to new Data Act requirements. They also criticized both the document’s scope and applicability. Thibault Schepel, Associate Professor in Law at VU Amsterdam is an example of this. stated:
This is a huge issue. Smart contracts, which make data accessible, are deemed to be irrevocable. So… basically, all oracles *shall* be redesigned (but how?(or else they will violate the law).
Schrepel even further statedThis act, if approved by the legislature would render millions of smart contracts online illegal in the jurisdiction where they are proposed. There is no way to adapt them to meet the requirements of the document.
According to Reuters, the EU recently focused its efforts on cryptocurrency. Some of its member states have been lobbying for the establishment of a regional crypto AML watchdog. reports.
How do you feel about the Data Act? What are your thoughts on smart contract requirements and what does it mean for data protection? Comment below.
Image creditShutterstock. Pixabay. Wiki Commons
DisclaimerThis article serves informational purposes. This article is not intended to be a solicitation or offer of a purchase or sale, nor a recommendation of or endorsement of products, services or companies. Bitcoin.comThe author does not offer advice on investment, tax or legal matters. This article does not contain any information, products, or advice that the author or the company is responsible for.