Polygon and Ledger want to protect smart contracts from European regulation

Polygon Labspublisher of the L2 of the same name, asks the European authorities to clarify Article 30 of Data Act which could impose a stop measure of smarts contracts on the permissionless networks.

In March, the European Parliament voted on a provision in the context of the review of the Data Protection Act or Data Act. The proposed regulations are intended to establish rules to encourage and protect the exchange of data.

The Data Act is not MiCA and has, a priori, little to do with crypto-assets. One provision, however, is likely to have an impact the blockchain industry. Last month, parliamentarians passed a measure requiring a mechanism to stop or alter smart contracts.

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Exclude permissionless blockchains from the scope

Such a proposal presents risks, considers Polygon Labsthe creator of the layer 2 dedicated to Ethereum. The development company has therefore sent an open letter to European authorities.

Specifically, we seek to clarify the scope and intent of art. 30″, the publisher reports.

Polygon therefore proposes to amend the Data Act section “to ensure that it applies, to the maximum extent possible, to authorized (permitted) smart contract-based systems owned and operated by an identifiable individual or entity.”

The disruption of smart contracts would then be limited to a “business,” as defined by the Data Act, that has entered into a traditional contractual agreement to share “personal data.”

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Ledger backs Polygon Labs’ proposals

An extension of the measurement to permissionless blockchains could otherwise hinder the “growth and responsible development” of these systems globally, argues Polygon Labs, whose solution is notably operated by Starbucks for its Web3 loyalty program.

Third-party developers have built and deployed robust smart contract-based applications on various permissionless blockchain networks developed by Polygon Labs,” the Web3 player, backed by French unicorn Ledger, points out.

In their proposed amended amendment, French wallet maker Ledger and Polygon argue for a reformulation of the offending section. In its current, extensive form, it refers to “The party that offers smart contracts”.

DeFi and dApp developers not affected by the Data Act

The open letter therefore suggests, among other things, “clarifying the term party offering smart contracts to exclude developers of decentralized protocol and application software.”

Other “clarifications” are desired. The two crypto companies propose that the Data Act include other restrictions. The goal:

That it apply only to traditional contractual agreements between or among two traditional natural or legal persons for the purpose of sharing confidential personal and business data.”

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