The cryptocurrency community criticizes the EU blockchain legislation

The Data Act, a collection of guidelines designed to develop a just and open data economy in the area, has been finalised by the European Union (EU). However, the crypto community has criticised one of the act's sections since it mandates the inclusion of a kill switch in smart contracts.

Self-executing contracts, or "smart contracts," are used on Ethereum and other blockchain systems. They are created to be immutable, which means that once they are in execution, they cannot be changed or halted. As a result, the parties involved in the contract may be expected to be transparent.

Nonetheless, the Data Act requires that smart contracts provide a way to be safely terminated or halted in the event of disagreements, mistakes, or harmful conduct. The act also provides mechanisms to guard against unauthorised data transfers and secure trade secrets.

According to the EU, these regulations are important to guarantee the ethical use of industrial data and remove obstacles to data exchange between various industries and services. The law is a component of a larger plan to increase innovation and competition in the digital sphere.

Many cryptocurrency supporters, however, argue that the kill switch requirement violates the fundamental tenets of blockchain technology and smart contracts, which are predicated on immutability and decentralisation. They worry that the EU rule would hinder innovation and make it challenging for developers of smart contracts to comply.

The practicality and security of including a kill button in smart contracts have also been questioned, as doing so would result in security gaps that hackers or other bad actors might exploit. The European Parliament approved the Data Act on March 14, and EU negotiators completed it on June 27. Before becoming legislation, it will now go through a formal approval procedure. The blockchain and cryptocurrency communities have voiced their worries and objections to the legislation in the hopes that the EU would change its mind about them.