On March 14, the European Parliament approved the Data Act, which aims to remove obstacles hindering access to industrial data and boost innovation. The act includes a provision mandating the modifiability of smart contracts.
The legislation establishes regulations for the equitable distribution of data generated by connected products and services, including the Internet of Things and industrial machines. The act is expected to promote the use of unused industrial data by facilitating the training of algorithms and lowering device repair costs.
Additionally, the Data Act contains provisions to safeguard trade secrets, prevent illegal data transfers, and impose requirements on the smart contracts of entities providing shareable data.
These requirements include the inclusion of internal functions that can stop or interrupt the operation of the contract and consideration of circumstances under which non-consensual interruption or termination is acceptable.
In addition, the act bestowed equivalent legal protection upon smart contracts in comparison to other types of contracts.
However, several concerns were raised by industry professionals about the legislation. OpenZeppelin's Head of Solutions Architecture, Michael Lewellen, expressed his reservations in a statement given to Cointelegraph.
According to Lewellen, the inclusion of a kill switch would compromise the immutability guarantees of smart contracts and create a single point of failure since the use of the kill switch would need to be overseen. Additionally, some smart contracts like Uniswap lack this kill switch capability.
According to a tweet by Professor Thibault Schrepel from the Vrije Universiteit Amsterdam, the act poses a significant risk to smart contracts that cannot be foreseen. He identified legal ambiguities in the legislation, highlighting that it did not clarify who is authorized to terminate or interrupt a smart contract.
The bill received a substantial majority of 500-23 votes, with 110 parliament members abstaining. The next step will involve negotiations between the European Council, as well as individual member countries of the European Union, to finalize the law's form.