European Union (EU) backs Data Act with clause to shut off smart contracts

The Act, which includes a provision requiring “kill switches” on smart contracts, now just requires approval from the European Council to become law. The European Parliament has voted to pass the Data Act, a contentious piece of legislation that contains a requirement that smart contracts be able to be terminated.

According to a press statement issued on November 9, the law was approved by 481 votes to 31 against. To become law, it must now be approved by the European Council, which consists of the leaders of the 27 European Union member states. The approved Data Act specifies that smart contacts “can be interrupted and terminated,” as well as controls that allow functions that reset or stop the contract. The Data Act, at its core, would allow people to access data generated by smart devices, with the European Commission claiming that 80% of such data is never used.

Critics of the Act have raised concerns about the smart contract clause, claiming that it is overly broad and lacks specifics on when interruptions or terminations should occur. According to an open letter written in June by EU blockchain advocacy organizations and signed by dozens of crypto enterprises, the Data Act might result in smart contracts that use data from public blockchains like Ethereum being deemed illegal. However, the European Commission has allegedly stated that the Data Act is unrelated to blockchain and that concerns that the Act will make smart contracts illegal are false.

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