- European DeFi industry worries about a Data Act law that could kill smart contracts.
- FThe law would require smart contracts to be terminated or interrupted at will.
- Advocates call on policymakers to consider the potential danger of spillover effects.
It has been reported that the European DeFi industry is lobbying against a potential Data Act law that could kill smart contracts and disrupt the broader blockchain industry. While negotiations for the law are set to conclude in June, advocates are worried that the legal texts do not indicate the scope of the article regulating smart contracts.
The report noted that advocates such as the European Crypto Initiative (ECI) had called policymakers to consider the potential danger of spillover effects to blockchain developers, which could effectively harm DeFi in member countries.
Therefore, the ECI urges regulators not to inadvertently shoot themselves in the foot by preventing innovation and technological development. Marina Markezic, executive director of the European Crypto Initiative, was quoted saying:
“The worst-case scenario is whether we would even be able to use public blockchains for using smart contracts while complying with the Data Act requirements.”
Notably, a source close to the negotiations noted that the European institutions hope to promote smart contracts through the Data Act and do not intend to regulate it.
However, one of the critical concerns for the DeFi industry is Article 30. The law would require smart contracts to be designed to allow them to be terminated or interrupted, which opposes the nature of blockchain. Meanwhile, a European Commission spokesperson clarified that the controversial article was neutral to technology. In his words:
“It sets high-level requirements for smart contracts, whether or not they are based on blockchain technology or a more traditional database.”
The three European institutions leading the negotiations have each reached their stance on the Data Act, and negotiations will continue during upcoming trialogue meetings this month and next.