EU approves the Data Act with a smart contract ban

By: Dickson Arinze

EU approves the Data Act with a smart contract ban

November 10, 2023 8:18 AM

The European Council's approval is all that's left for the Act to become law and include a provision requiring "kill switches" for smart contracts.

The European Parliament approved the Data Act, contentious legislation that includes a clause requiring smart contracts to have the option to terminate.

The parliament announced the bill's passage by a vote of 481 to 31 on November 9. Before it can become a law, it must first receive approval from the European Council, which consists of the leaders of the 27 nations that make up the European Union.

Smart contracts must have rules that enable functions that reset or end the contract, as outlined in the approved Data Act.


A highlighted section of the Data Act pertains to smart contracts.
Source: European Parliament

The Data Act's central tenet is to give consumers access to the data they generate from smart devices; according to the European Commission, 80% of this data is never used.

Detractors of the Act have raised questions about the smart contract provision, arguing that the definition is too general and lacks specifics on when interruptions or terminations should take place.

It was also said in a June open letter addressed by EU blockchain advocacy associations and signed by dozens of crypto enterprises that smart contracts that use data from public blockchains like Ethereum may be in violation of the law due to the Data Act.

Concerns that the Data Act might render smart contracts illegal are unwarranted, as the European Commission has stated.