EU Enacts Data Act Including Clause to Disable Smart Contracts

The European Parliament has recently given the green light to the Data Act, a controversial law that mandates smart contracts to have the capability to be stopped.

Passed with 481 votes for and 31 against, the legislation now awaits approval from the European Council, representing the heads of the 27 European Union member states.

The approved Data Act specifies the necessity for smart contracts to be “interrupted and terminated,” as well as including controls that enable the cessation or pausing of the contract’s functions.

Highlighted excerpt of the Data Act relating to smart contracts. Source: European Parliament

At its essence, the Data Act aims to grant users access to the data they produce through smart devices, with the European Commission asserting that 80% of such collected data goes unused.

Critics of the Act have raised apprehensions regarding the broad definition of smart contracts, highlighting the lack of clear specifics on when interruptions or terminations should take place.

An open letter sent in June by EU blockchain advocacy groups, endorsed by numerous crypto firms, expressed concerns that the Data Act might classify smart contracts using public blockchain data, such as Ethereum, as violating the law.

Despite this, the European Commission has stated that the Data Act does not target blockchain, dismissing fears that it would render smart contracts illegal as groundless.

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