Data Act: the reference to smart contracts is maintained, but restricted

L’blockchain industry is concerned about the mention of smart contracts in the text of the Data Act and thebond to integrate a stop mechanism. The legislator a adopted the projectbut is intended reassuring about his impact.

In theory, the boundaries between data exchange regulation and the blockchain ecosystem are well defined. Nevertheless, the mention of smart contracts in the European text of the Data Act triggered an outcry.

The crypto industry was therefore lobbying for a reformulation of article 30 in favor of digital contract. The European legislator has just found a agreement on the Data Act, although the reference to smart contracts is purified.

Adjustments made to prevent side effects

Commissioner Thierry Breton welcomes on Twitter. For their part, the text’s rapporteurs are reassuring. The Data Act and its measure requiring the provision of a kill switch or emergency stop button are raising fears of side effects for decentralized finance.

With the adjustments made to the text, we are no longer dealing with smart contracts in general, but we are making this regulation applicable specifically to the enforcement of contractual clauses in the context of data sharing,” the Parliament’s negotiator tells the specialist press.

Another source clarifies that these “adjustments” have only been did not result in the removal of the reference to smart contract. To avoid any legal risk, Web3 players suggested using the term “digital contract”.

This proposal was not adopted by the legislator. As for the final version of the text, it has not yet been published. So we’ll have to wait a little longer for legal experts to study it and identify potential risks.

Public blockchain and DeFi in danger?

The European Commission had already stated that the blockchain industry’s fears were unfounded. According to the Commission, the Data Act will no impact on smart contracts existing.

The current text could inadvertently limit the use of smart contracts based on public/unlicensed technology and introduce uncertainty for smart contracts already deployed”, however, considered several organizations and industry representatives in an open letter.

For its signatories, including Polygon, Stellar, NEAR and Cardano, the Data Act also presented the risk of interfering with MiCA by regulating programmable contracts operated for the exchange of digital assets.

The EU negotiator, however, seems to address this fear directly by stipulating that the regulation will apply “specifically to the enforcement of contractual clauses in the context of data sharing”.

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