IOTA and Polygon are uniting to contest the smart contract restrictions imposed by the European Parliament's Data Act. Industry insiders warn that the proposed legislation could unwittingly thwart the decentralization of smart contract-based systems.
The Data Act's current form could significantly impact public blockchain networks and decentralized applications (dApps). It seeks to enforce regulations for shared data management and boost legal clarity at the EU level, promoting transparency and user access to their data.
However, the legislation could complicate matters as it offers an unclear legal distinction between smart contracts and conventional legal contracts. Dominik Schiener, IOTA's co-founder and chairman, cautions that the Data Act could require major smart contract protocols like Ethereum, Cardano, Polkadot, and Binance Chain to undergo compliance overhauls and code adaptations.
The potential need for a "kill switch" in smart contracts for emergencies has sparked debate in the crypto community, with many arguing it compromises their immutability. Schiener asserts that the law views smart contracts in the context of a data delivery agreement, leading to uncertainties about their application and control.
Rebecca Rettig, chief policy officer at Polygon Labs, echoes these concerns. She warns that unless the bill undergoes prompt amendments, it could advance to the next approval stage, jeopardizing decentralized finance and the Ethereum ecosystem.
IOTA and Polygon, along with global platforms like INATBA, are now working together to avert the risk posed by the Data Act on permissionless blockchains. Their efforts underscore the industry's commitment to preserving the integrity of decentralized innovation.
