European regulations are leading to a number of discussions surrounding smart contracts within the DeFi industry. The European Crypto Initiative, along with other supporters of DeFi, have expressed concern that the Data Act could potentially have a serious, negative impact on blockchain based projects. According to Marina Markezic, the Executive Director of the European Crypto Initiative, the language of the Data Act does not make it clear when certain smart contract regulations should come into play. This has led to some speculating that the Data Act has the potential to negatively affect DeFi, or even potentially destroy it.
The European Crypto Initiative has distributed a policy document to decision makers across the continent in an effort to explain the negative effects of these regulations. It explains how such overly-strict regulations could be seen as Europe shooting itself in the foot, by halting innovating and preventing technological progress within the blockchain industry.
The biggest challenge is the Discussion Article 30, in which problems arise with the need for smart contracts to be written so that they can be cancelled or stopped. This means that legally, legislators must decide when and why regulation of such contracts should occur.
In addition to this, the Data Act also details stringent access control measurements that must be taken at both governance and smart contract levels. A representative for the European Commission has informed us that the language detailing smart contracts is technology-neutral.
The discussions surrounding the Data Act have been closely watched by legislation bodies, who will meet for a trialogue meeting on May 23rd. This meeting will address any potential issues with existing regulations, although no exact changes have been noted at this time.
It is clear that these discussions have a rapidly developing timeline, and that European regulators will continue to assess the impact of such regulations and adjust when required. Currently, the Data Act is expected to be confirmed and signed off by June 2021.
Lucas Martin
- 2023-05-08
Understanding European Regulations & The Data Act
European regulations currently being discussed within the DeFi industry have sparked widespread concern, such as how the language of the Data Act does not make it clear when certain smart contract regulations should come into play. Read further to learn more about the discussions around the Data Act.
