EU smart contract regulations receive mixed responses

EU smart contract regulations receive mixed responses

The EU’s Council revised the European Union’s Data Act published by the bloc’s member states on Monday. Under this revision, smart contracts must be able to stop or terminate their operations. The European Union’s Council, which represents national governments, agreed on the document on Friday, and its suggestions appear to reflect those already supported by European Parliament legislators.

Concerns have been raised in the blockchain community about proposed laws mandating smart contracts to be able to interrupt or terminate their activities, which would undermine what are intended to be automated and unalterable programmes. The last draft of the bill must now be discussed by the European Commission between the parliament and the council.

“The new rules will empower consumers and companies by giving them a say on what can be done with the data generated by the connected products,” lead lawmaker Pilar del Castillo Vera said during the debate on the bill.

Recent frauds like the exit scam by Kokomo Finance as misusing the smart contract feature. The KOKO deployer, according to CertiK, a blockchain security firm, targeted the smart contract code of a wrapped Bitcoin currency, cBTC. This was made possible by resetting the reward speed and suspending the borrow function.

Despite that, many people from the industry are opposing the bill. Thibault Schrepel, an associate professor at VU Amsterdam University, tweeted before the vote, “Article 30, as currently drafted, goes too far in addressing the issues raised by immutability.” It puts smart contracts in jeopardy to an extent that no one can predict. Schrepel, a blockchain legal expert, feels that the legal wording is ambiguous about who would have to push the kill switch on a smart contract in practice and that it violates the fundamental concept that automated programmes cannot be altered by anybody.

On Tuesday, March 14, 2023, 500 EU lawmakers voted in favour of the bill, 23 against it, with 110 not voting. This version contains measures aimed at giving users more control over the information obtained via smart devices. The new restrictions apply to contracts that make data available as part of controls on smart-home products like vehicles and refrigerators, although it is unclear how far they go.