The European Parliament has approved the Data Act, a contentious piece of legislation featuring a provision requiring smart contracts to be capable of termination. The parliament announced the legislation’s passage with 481 votes in favour and 31 against on November 9. The next step for it to become law is approval from the European Council, consisting of the leaders of the 27 EU member states.
The adopted Data Act mandates explicitly that smart contracts should be “interrupted and terminated,” including provisions for controls enabling functions to reset or halt the contract. The primary objective of the Data Act is to grant users access to data generated from smart devices, with the European Commission asserting that 80% of such collected data remains unused.
Critics of the Act have expressed reservations about the broad definition of the smart contract clause, arguing that it lacks precise details on when interruptions or terminations should occur. In a June open letter, various EU blockchain advocacy groups, endorsed by numerous crypto firms, expressed concerns that the Data Act might label smart contracts utilising public blockchain data, such as Ethereum, as law violations.
Despite these concerns, the European Commission has stated that the Data Act does not specifically address blockchain and that worries about the act rendering smart contracts illegal are unfounded.