EU Politicians Pass Policy on Smart Contracts Deemed ‘Impossible to Comply’ With

The proposed regulation, which is not yet law, does not specifically target crypto but could affect DeFi

article-image

jarrow153/Shutterstock.com modified by Blockworks

share

The European Parliament has voted to pass the Data Act, a legislative proposal that will challenge the immutability of smart contracts.

500 lawmakers voted in favor of the proposal, 23 against, and 110 chose to abstain.

This new bill has drawn criticism from the decentralized finance (DeFi) community, with Curve Finance, a prominent decentralized exchange (DEX), noting that it would be “impossible to comply” with the new legislation.

Loading Tweet..

One of the major concerns surrounding the new bill is the requirement for smart contracts to be designed so that it can ensure the “protection of confidentiality of trade secrets,” and the requirement that smart contracts “could be reset or instructed to stop or interrupted.”

Thibault Schrepel, an associate professor at the VU University Amsterdam, noted in a tweet that this new bill “endangers smart contracts to an extent that no one can predict.”

“Article 30 does not provide clarity as to who should be able to ‘terminate the continued execution of transactions,’” Schrepel tweeted. “Is it the creator of the smart contract? Public authorities? Courts?”

Compliant with this legislation, would be complicated at best, according to Michael Lewellen, Head of Solutions Architecture at the Blockchain security and smart contracts expert OpenZeppelin. “Including a kill switch undermines immutability guarantees and introduces a point of failure, since someone needs to govern the use of such a kill switch,” Lewellen told Blockworks, pointing to protocols such as decentralized exchange Uniswap, which, like Curve, does not have this ability.

At a press conference, Thierry Breton, the commissioner for the Internal Market for the European Union, noted that “we need to harmonize basic requirements for the smart contracts and this will ensure interoperability and legal certainty.”

“This will enable the reliable deployment of this — so-called — smart contract,” Breton said.

Pilar del Castillo Vera, a member of the European Parliament, agreed with this sentiment, adding “we still have to debate this.” 

The proposal will now move to the trilogues phase where the EU Council and the EU Commission will debate the details. The first meeting is set to take place on March 28.

Updated March 14, 2023 at 5:42 pm ET: Addition of a comment.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates (19).png

Research

Suilend has grown into the top money market and liquid staking provider on Sui. STEAMM, Suilend’s Superfluid AMM, presents a compelling avenue for growing market share within Sui’s DEX landscape and revenue generation for the protocol. Suilend’s multi-product suite position it well for owning market share across key verticals. While current metrics across the Sui ecosystem are likely inflated due to Sui Foundation incentive programs, SEND trades at amongst the lowest multiples in the lend/borrow sector, suggesting that a bull case for continued growth in the ecosystem may be mispriced.

article-image

Silk Road founder Ulbricht made a triumphant return to the Bitcoin Conference, 10 years on from sentencing

article-image

A Blockworks Research report looked at who could take up some of the marketshare in the launchpad space

article-image

Business-to-business stablecoin payments are on the rise, per a report from Artemis, Dragonfly and Castle Island

article-image

Crypto continues to do its thing: incentivizing behavior

article-image

Kraken will soon offer Backed ‘xStocks’ as Solana tokens

article-image

In a unanimous decision, the US Court of International Trade has ruled that Trump’s IEEPA tariffs are unlawful