Lawmakers of the European Union (EU) have agreed to move ahead with the European Data Act, thereby providing a kill switch for smart contracts. The controversial act has already garnered criticism from the crypto community. It aims to encourage increased use of data resources to train algorithms and update the rules for smart contracts, and the kill switch would enable successful termination of these smart contracts.
European Data Act Finalized – EU Now Has a Kill Switch
The European Data Act was first proposed in the European Parliament on March 14, 2022. The European Union’s Commissioner for Internal Markets, Thierry Breton, called the act a “milestone in reshaping the digital space.” Although the parliament passed the act on March 14, negotiations among lawmakers were already underway for its final version.
The act focuses extensively on using industrial data and removing barriers to sharing the data generated by a slew of data-centered services like the Internet of Things (IoT). However, the act caught a wave of criticism from the crypto community, mainly because of its proposals around smart contracts.
The act has specific provisions which impose a few alterations for smart contracts, including a kill switch to allow for safer termination. The European Data Act establishes a set of rules that require parties providing smart contracts to have shareable data.
It also included options for safe termination and interruption, acting as safety nets to safeguard trade secrets and prevent illicit data transfers. Experts believe that the legislation would force smart contract developers to design reset possibilities to allow termination or interruption. Some experts argue that the EU is restricting innovation and hampering their chances to stand firm in the crypto industry.
EU Parliament passed smart contract regulation under Data Act
by Inbar Preiss
POLICY • MARCH 14, 2023, 7:49AM EDT
#Smartcontract developers may need to design reset possibilities to allow termination or interruption of transactions.This may restrict innovation or make it… pic.twitter.com/iz9nGpFkR0
— 🟩 Dr Martin Hiesboeck (@MHiesboeck) March 14, 2023
Uphold’s head of research, Martin Hiesboeck, said that the smart contracts are just one step away from falling under the EU’s more comprehensive regulations.
In the meantime, the European Commission has also proposed a legislative plan for the digital euro. The bill was initially scheduled to be presented on June 28, 2023, but is now delayed. It was halted after the leak of the bill draft, which covered issues of privacy and other technical issues for the proposed Central Bank Digital Currency (CBDC).
The much-awaited Market in Crypto Assets (MiCA) is nearly 18 months away from its complete implementation which is slated to occur by December 30, 2024. A multi-level consultation process is underway, inviting insights from industry experts across the continent. A seamless implementation of MiCA might require significant work.
Making all 27 member nations agree to the pioneering comprehensive regulatory framework would involve great diplomacy skills. Although member nations cannot deny signing the dotted line, they can delay the procedure by raising concerns.
There is still time for MiCA’s execution, and a deep study would be required to understand its after-effects. However, policymakers are already calling for MiCA 2.0. Some of its rules were executed on June 29, 20 days after its publication in the Official Journal of the European Union on June 9, 2023. The complete framework shall only be effective from December 30, 2024.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/07/05/eu-to-have-a-kill-switch-for-smart-contracts-data-act-okd/