Permissioned vs Permissionless: Why Polygon Is Telling the EU to Know the Difference

Polygon says that Article 30, as it currently stands, is in opposition to the European Union’s other crypto-related policies

article-image

jarrow153/Shutterstock modified by Blockworks

share

European regulators need to understand the difference between permissioned and permissionless systems, Polygon Labs said in an open letter published Monday. 

Polygon is calling for the European Parliament to amend Article 30 of the Data Act to clarify that permissionless systems are excluded from certain regulations. 

Specifically, Polygon would like to see the language updated to “ensure it accounts for the ways in which smart contracts operate and the potential negative consequences of imposing a requirement for ‘safe termination or interruption’ of such smart contracts in permissionless systems,” the team wrote in the letter

Only “enterprises” with an “identifiable natural person or corporate entity” should be subject to Data Act regulations, Polygon said. 

The company claimed that Article 30, as it currently stands, is in opposition to the European Union’s other crypto-related policies, most notably the markets in crypto-assets (MiCA) regulations in Europe, which are poised to pass this month.

MiCA, in its most recent draft, excludes “fully decentralized” crypto asset services from regulations outlined in the policy, Polygon noted. 

“Art. 30 should remain consistent with MiCA in keeping decentralized, autonomous systems out of regulatory scope,” the letter added. 

Crypto wallet provider Ledger is also in support of Polygon’s proposed Article 30 changes, Polygon Chief Policy Officer Rebecca Rettig said. 

“We will continue to engage constructively with policymakers and regulators in the EU (and beyond) to ensure that any regulation is evergreen, can grow with the innovation & also build sufficient guardrails for users of blockchain-based software,” Rettig added on Twitter

It’s not the first time the crypto industry has expressed concern about regulators’ approach to DeFi. When the Office of Foreign Asset Control (OFAC) sanctioned crypto mixing service Tornado Cash, crypto policy groups spoke out and Tornado Cash users joined forces to sue the government, claiming a software cannot be sanctioned. 

Polygon invited European regulators to respond and comment on its amendment proposal, the letter said.


Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.


Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.


Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Cosmos Hub: ATOM Economic Zone

Research

Replicated Security, the Hub’s Validation-as-a-Service offering that went live in March, is the first step in bringing value accrual to ATOM stakers.

/

article-image

Kenya’s central bank doesn’t seem enamored by the idea of a CBDC but hasn’t slammed the door shut yet

article-image

Both Ethereum and Solana have enjoyed vibrant DeFi environments, but this has not yet been the case for Cosmos

article-image

As Japan takes important step forward on stablecoins, industry participants say, proposed US laws around such crypto assets remain in flux

article-image

Stablecoins offer global financial access and on-chain transactions without limitations, while FedNow falls short in terms of utility, global reach and inclusivity

article-image

Connext wants to make using layer-2s and layer-3s a seamless experience

article-image

GameStop has been dabbling in Web3 initiatives since at least January 2022