The European Union has taken a bold step towards regulating the blockchain space with its latest proposal. The bloc’s member states have agreed that smart contracts must now contain a kill switch, a move that has caused some concern in the blockchain community.
While the proposals have been welcomed by lawmakers at the European Parliament, lobby groups fear that the regulations will undermine the automation and unalterability of smart contract programs. Negotiations between the parliament and council, mediated by the European Commission, will determine the final wording of the law.
The Swedish minister who chaired the council talks has said that the law will enable data to flow freely within the EU and across sectors, benefiting businesses, researchers, public administrations, and society.
However, the scope of the new rules remains unclear, with questions surrounding how far they will go. Some experts believe that most smart contracts may struggle to meet the regulations as drafted by the Parliament, while others fear that the lawmakers’ version inhibits the ability to set standards for smart contracts.
The blockchain space is rapidly evolving, with the advance of CBDCs and the fallout from the 2022 market crash, making it crucial to stay informed and secure your seat.