European Data Act: Boon or Bane for Smart Contracts and DeFi Sector?

Intricate European cityscape at dusk, silhouettes of historical buildings, a futuristic world of DeFi on one side and traditional financial infrastructure on the other, soft golden glow contrasting with cool blue hues, tension-filled air, prominent IoT symbols subtly interwoven into the scene, spotlight on a negotiation table, expressionist style.

The regulatory landscape for smart contracts and decentralized finance (DeFi) in Europe continues to evolve as industry stakeholders voice concerns over the possible implications of the European Data Act. Currently under negotiation and set to conclude by the end of June, the act seeks to regulate data shared between devices using Internet of Things (IoT) networks, prompting anxiety over the lack of clarity on the regulation of smart contracts that underpin DeFi.

Organizations like the European Crypto Initiative have urged policymakers to address concerns around the spillover of the Data Act to other blockchain developers, which could potentially hamper the growth of DeFi. Marina Markezic, Executive Director of the European Crypto Initiative, spoke to DL News, expressing concerns over the worst-case scenario where public blockchains may become unusable for smart contracts while complying with Data Act requirements. Markezic adds that Europe should avoid inadvertently damaging innovation and technological development in the broader blockchain sector.

While the European blockchain industry has expressed concerns over the possible implications of the Data Act, sources close to the issue have highlighted that European lawmakers are actually seeking to promote the use of smart contracts via the Data Act instead of regulating ledger technology. These ongoing discussions could lead to reassuring outcomes for the DeFi sector, as the European Commission spokesperson has noted that the controversial article on smart contract regulation is neutral, with high-level requirements that apply to both blockchain technology and traditional database systems.

The upcoming trialogue meeting on May 23 will address the issue regarding the Data Act text, with three European institutions having reached their own stance on the matter. As European lawmakers continue to navigate the complex world of crypto regulation, they passed the MiCA Act last month, designed to supervise the emerging crypto industry. It is important to note that presented content may include the author’s personal opinion and is subject to market conditions. Be sure to conduct your own market research before investing in cryptocurrencies, as neither the author nor the publication will be held responsible for personal financial losses.

Source: Coingape

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