The European Commission has recently addressed concerns surrounding the impact of the Data Act on blockchain technology and its associated innovations, such as smart contracts. According to a spokesperson for the commission, there is no reason to believe that the existing smart contracts will become illegal upon the implementation of the Data Act. The bill is currently being deliberated within the EU, generating anxiety within the industry regarding its potential effects on smart contracts’ ability to withstand manipulation, safely reset, and control access.
While the law covers software used to automate execution of contracts in the context of data sharing, the spokesperson reassured entrepreneurs exploring Web3 that the high-level requirements should not pose a problem for smart contract software vendors. However, these reassurances have not entirely dispelled the fears of industry lobbyists who worry that the law’s scope may inadvertently extend further than intended.
Chris Donovan, general counsel at the NEAR Foundation, has expressed concerns about the broad drafting of the bill and the potential uncertainty it could create. Drawing a comparison to the United States’ growing number of regulatory actions against crypto companies, Donovan suggests that the EU’s proposed regulations may be difficult, if not impossible, to fulfill in certain cases.
One of the key concerns revolves around the application of these regulations on public, permissionless networks. While private blockchains with a central gatekeeper might be able to comply with the proposed rules, public networks that are designed specifically to be manipulable could be undermined. Donovan highlights that this “trustless transaction environment” is the core of public permissionless networks, which is under threat due to the potential restrictions imposed by the Data Act.
In response to these concerns, an open letter was recently sent to lawmakers and the commission, urging for drafting changes to remove any ambiguity. Signatories include companies such as Fujitsu, Ledger, and Ripple, as well as lobbying organizations like the European Crypto Initiative and Blockchain for Europe. The letter warns that the law could impact smart contracts on blockchains like Ethereum, Avalanche, Cardano, NEAR, and Polkadot, create conflicts with the recently agreed Markets in Crypto Assets law, and even damage the European economy.
Although both the Council and the European Parliament have approved their versions of the Data Act, each containing the disputed smart contract provisions, Donovan remains optimistic that the industry’s concerns will be heard and addressed. As the legislative process continues, the community eagerly awaits any changes to the act that may ultimately shape the future of blockchain technology and smart contracts in the European Union.
Source: Coindesk
