The European Union (EU) is making progress on the European Data Act, despite criticism from the cryptocurrency community, as lawmakers have reached an agreement to move forward with the legislation.
The EU Commissioner for Internal Markets, Thierry Breton, confirmed the deal in a June 27 tweet, describing it as an important milestone in reforming the digital landscape.
The integration of reset options
The introduction of new EU legislation has raised concerns among crypto proponents as it is believed that the regulations could force smart contract developers to include reset options for terminating or pausing transactions.
https://twitter.com/ThierryBreton/status/1673814911137316864?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1673814911137316864%7Ctwgr%5E3b663071d d7cdb9e2efe5b526f74e9b0377ffd3c%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcryptosheadlines.com%2Feu-implements-smart-contract-kill-switch-rules-in-data-act%2F
The advancement was based on Article 30 of the Data Act, which requires smart contracts to include a well-defined mechanism for termination or interruption. This provision aims to ensure that smart contracts have internal functions that can reset or stop their operation to prevent accidental executions in the future, with clearly and transparently defined conditions.
While other provisions in Article 30, such as including controls for terminating trade execution, are less controversial and provide greater protection against exploits, they raise concerns among some in the DeFi space who argue that they are contradictory with the principles of decentralization, since a “kill switch” could theoretically grant excessive power to regulators and government agencies.
The crypto community has remained divided on this, with some suggesting these remedies not to build in the EU and others who suggest this necessary in the long term.
In addition to the concerns surrounding the Data Act, the language of the legislation remains ambiguous, leading to interpretation and speculation within the industry. The lack of clarity raises questions about the true nature of the proposed kill switch mechanism.
Moreover, critics also argue that such requirements could hinder innovation and pose challenges for smart contracts in the crypto industry to ensure compliance.
Waiting for favorable votes
Despite the fact that the European Commission has dismissed the concerns of the EU blockchain industry, stating that the new rule will not eliminate existing smart contracts and that the implementation of ‘high-level standards’ will not be a challenge for suppliers, doubts remain as to whether the A final agreement will address the concerns of the EU blockchain industry.
However, nothing is set in stone yet. For this rule to become law, the law agreed by lawmakers must receive favorable votes from the European Parliament and the Council, which represent the bloc’s 27 member states.
