Polygon, Ledger urge EU to amend smart contract rules forcing inadvertent centralization

Polygon Labs and Ledger are calling on EU lawmakers to amend certain provisions of data law related to the smart contract rule.

companies are joint open letter The current version of Article 30 of the Data Act does not take into account the complexity of permissionless smart contract systems, stating that it “hampers innovation and economic growth” in the European cryptocurrency industry.

They added that the data law is meant to “close the digital divide” and enable everyone to participate in these emerging systems. However, the current state of Article 30 may have the opposite effect and limit equal participation in these systems.

“We appreciate your consideration of the proposed amendments to Art. I’ll explain below.”

Recommendation

Certain provisions of Article 30 need to be changed, according to the letter, as their lack of clarity and specificity in the wording makes them unnecessarily broad in scope.

It added that this could inadvertently lead to “the unintended effect of banning unauthorized autonomous smart contracts and applications,” which definitely falls under this umbrella.

The main issue raised in the letter was the preamble to Article 30, in which the requirement was to be imposed on “the party providing the smart contract in the context of the agreement to make the data available”. I stipulate.

However, the letter argues that a significant portion of smart contract systems are autonomous and have no such parties, as they are unable to comply with data law obligations.

No provider

Both companies have asked lawmakers to amend the clause so that it applies only to “authorized” smart contract-based systems that have an “identifiable natural person or business entity” that owns and operates it.

They also called on lawmakers to exclude software developers working on decentralized protocols and applications from the term “parties offering smart contracts.”

“Given the autonomous nature of dApps and the fact that there is no party to ‘provide’ dApps, the EU decided that Art. , is intended to prevent people involved in software development from being mistakenly seen as “Party Supplied” smart contracts. “

Furthermore, the letter acknowledged that while certain projects may claim to be decentralized, there are still points of centralization. It ensures that the entity that centrally manages the protocol is responsible.

The letter asked lawmakers to clarify that “agreement to make data available” only applies to “traditional contractual agreements” between two persons or business entities.

The current iteration of Article 30 forces centralization through the provision that smart contracts must have the ability to terminate. As mentioned earlier, this is not possible without a centralized entity controlling the system.

It also recommends clearly defining the scope of Section 30, stating that “agreement” refers only to personal data, trade secrets, or sensitive business information.

Polygon and Ledger note that the wording and scope of the Data Act is similar to the Crypto Asset Market (MiCA) Regulation, which describes fully decentralized cryptocurrency projects and exempts them from the requirements imposed on centralized entities. It ended by asking lawmakers to ensure that