The final draft of the European Union’s new Data Act has ruffled feathers in the blockchain sphere, leaving stakeholders skeptical as the law seems to bypass the sector’s concerns. They fear that the current legislation could potentially render most smart contracts illegitimate. According to documents available via EU data freedom policies, the provisions aimed at securing safe termination of automated data-sharing arrangements refer generally to “smart contracts.” Contrarily, the industry was hoping for a more secluded approach, focusing solely on private and permissioned data records.
Interestingly, the legislation, divulged by Spain, which is leading the conversation, has tentatively adapted to the provisional political agreement achieved at a meeting held on June 27. The agreement allegedly resolved all political hurdles and successfully finalized debates with the European Parliament legislators. However, before it becomes a law, the proposal requires formal endorsement from both the parliament and governments convening in the Council of the EU.
Interestingly, the term “smart contracts” was consistently used in the legislative text rather than the sector’s preferred terminology of “digital contracts.” On the same note, the new law puts an onus on the “vendors” of these automated programs. This wording has arguably stirred up apprehensions among lobbyists, fearing that it may induce an infinite responsibility in circumstances where there is no single seller in a decentralized framework.
The legislation has subtly evolved from the European Commission’s initial February 2022 proposal, stressing that these guidelines apply solely when programs are used for “automated execution” of possible data-sharing contracts for smart apparatus such as connected vehicles and refrigerators. However, the scope doesn’t mention private or permissioned networks, therefore appearing broader than what was initially requested by the lobbyists.
The signatories of an open letter in June warned that the plans might prove unfeasible and betray the very purpose of permissionless networks where nobody has supremacy. However, the commission has negated claims suggesting that existing contracts would become illegal.
This situation creates an air of uncertainty about the digital contract environment’s future, and particularly for those involved in decentralized systems. It’s a space to watch as the legislation could greatly impact how the sector is shaped moving forward. The decisions made will be a critical factor in determining whether Europe will successfully navigate the gauntlet of regulatory challenges this budding industry presents.
Source: Coindesk
