BRUSSELS, Belgium, November 14, 2023 –The European Parliament voted to approve the Data Act on November 9, a controversial piece of legislation that includes a provision allowing regulators to terminate Smart Contracts. 1Stored on a blockchain, smart contracts are contracts that execute automatically upon predefined conditions. They can be used to automate a wide range of transactions, such as payments, insurance claims, and supply chain management.
The Act was passed with 481 votes in favor with 31 against.
To become law, it will now need approval from the European Council and the heads of each of the 27 European Union member states, the parliament said in a press release. 2
The Data Act mandates smart contracts to be interruptible and terminable, with controls for resetting or stopping functions.
The Data Act is designed to update the EU’s data protection rules, which were first introduced in 1995. It aims to give individuals more control over their data and make it easier for businesses to operate across borders within the EU.
The ‘kill switch’ is one of the most contentious aspects of the Data Act. It would give regulators the power to terminate smart contracts that they believe are violating the law.
Supporters of the kill switch argue that it is necessary to protect consumers and businesses from the risks of smart contracts. They say that smart contracts can be used to carry out illegal activities, such as money laundering and fraud. They also say that smart contracts can be hacked or malfunction, which could cause financial losses.
Opponents of the kill switch argue that it would stifle innovation in the blockchain industry. They say that the power to terminate smart contracts would give regulators too much control over the industry. They also say that it would be difficult for regulators to keep up with the pace of innovation in the blockchain industry.
The Data Act is still subject to approval by the European Council, the heads of each of the 27 European Union member states. If the European Council approves the Data Act, it will then become law.
- Investing.com: https://www.investing.com/news/cryptocurrency-news/eu-backs-data-act-with-clause-to-shut-off-smart-contracts-3229879[↩]
- European Parliment: https://www.europarl.europa.eu/news/en/press-room/20231106IPR09025/parliament-backs-plans-for-better-access-to-and-use-of-data[↩]
