EU Parliament Approves Data Act With Smart-Contract Kill Switch Provision

Members of the European Parliament voted Thursday to approve a Data Act containing a controversial clause that could make most smart contracts unlawful.

The act, which establishes rules on the sharing of data, received 481 votes in favor and 31 votes against, according to a press release. The legislation now needs formal approval from the European Council, a body comprising the 27 member nations’ heads of state.

The final version of the bill, reviewed by CoinDesk in July, contained a provision requiring automated data-sharing agreements to be capable of being safely terminated. The July 7 text referred broadly to “smart contracts” rather than to privately owned and permissioned data records. Smart contracts are tools that automatically execute transactions when certain conditions are met. Organizations linked to blockchains like Stellar, Polygon, NEAR and Cardano expressed their concerns in an open letter at the time.