Developing legislation for the larger crypto-economy has been a priority for European authorities. Now that legislation that would ban the smart contracts that support the decentralized finance (DeFi) protocols is on the law the European blockchain industry is poised to make one final push to stop it.
European Regulators Want to Repeal the DeFi-killing Smart Contract Laws
The legal documents, which contain a section on smart contract regulation, have raised concerns from the decentralized banking sector because they are unclear about their reach.
Legislators have been urged by DeFi supporters, like the European Crypto Initiative, to address worries about the Data Act‘s possible effects on other blockchain initiatives. A spillage like that could potentially destroy DeFi, according to the European Crypto Initiative.
The worst-case scenario is whether we would even be able to use public blockchains for using smart contracts while complying with the Data Act requirements.
Marina Markezic, executive director of the European Crypto Initiative
In a policy paper distributed to over 100 decision-makers, the trade association claimed that Europe shouldn’t accidentally impede innovation and technical advancement in the bigger blockchain industry because this would be a self-defeating move.
What Are Legislators Doing?
Sources familiar with the situation claim that European politicians are attempting to promote the usage of smart contracts through the Data Act rather than regulate ledger technology. Next week, the lawmakers may address concerns from the industry on the planned discussions.
The regulation stipulates that both the governance and smart contract levels of smart contracts must use strict access control mechanisms to ensure their security. However, the contentious issue of smart contract regulation is technology-neutral, according to a spokesperson of the European Commission.
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