EU backs Data Act with clause to shut off smart contracts

The European Parliament has voted to approve the Data Act — controversial legislation that includes a stipulation necessitating smart contracts have the ability to be terminated.

In a Nov. 9 press release, the parliament said the legislation passed 481 votes to 31 against. To become law, it will now need approval from the European Council — the heads of each of the 27 European Union member states.

The adopted Data Act outlines the requirement that smart contacts “can be interrupted and terminated” along with controls allowing functions that reset or stop the contract.

At its core, the Data Act would allow users to access data they generate from smart devices, with the European Commission claiming that 80% of such data collected is never used.

The Act’s critics have highlighted concerns about the smart contract clause, saying the definition is too broad and doesn’t provide clear details on when interruptions or terminations should occur.

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A June open letter sent by EU blockchain advocacy bodies and signed by dozens of crypto firms also said the Data Act could see smart contracts that use data from public blockchains like Ethereum be deemed in breach of the law.

The European Commission has reportedly said, however, that the Data Act isn’t concerned with blockchain and fears the Act would make smart contracts illegal are unfounded.

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