European regulators have been working on introducing laws for the broader crypto economy and the European blockchain industry is now looking to make a final push for preventing laws that would crush smart contracts underpinning the decentralized finance (DeFi) protocols.
The European Data Act, currently under negotiations will conclude by the end of June and seeks to regulate data shared between smart devices using IoT networks. The DeFi sector has shared concerns over the lack of clarity on the regulation of smart contracts underpinning DeFi.
Advocates of DeFi such as the European Crypto Initiative have asked policymakers to address the concerns of spillover of the Data Act to other blockchain developers. The European Crypto Initiative notes that such a spillover could potentially kill DeFi. Speaking to DL News, Marina Markezic, executive director of the European Crypto Initiative, said:
“The worst-case scenario is whether we would even be able to use public blockchains for using smart contracts while complying with the Data Act requirements. Europe shouldn’t shoot itself in the foot by inadvertently damaging innovation and technological development in the broader blockchain industry”.
EU Giving Mixed Signals Over DeFi
Sources close to the developments told DL News that European lawmakers are actually looking to promote the use of smart contracts via the Data Act, and are not willing to regulate the ledger technology. The lawmakers might address the industry concerns over the negotiations taking place next week.
The spokesperson of the European Commission noted that the controversial article on smart contract regulation is neutral to technology. “It sets high level requirements for smart contracts, whether or not they are based on blockchain technology or a more traditional database,” the spokesperson said.
However, three European institutions negotiating the matter have reached their own stance on the Data Act. The upcoming trialogue meeting on May 23 will address the issue with the Data Act text.
Last month, European lawmakers passed the MiCA Act to supervise the emerging crypto industry.
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