Unlocking the Future of Smart Contracts: Polygon Urges EU Lawmakers to Address Data Act

Polygon Labs Calls on EU Lawmakers to Address Smart Contracts in Data Act

Polygon Labs, the core company behind the development of Ethereum layer-2 scaling solution Polygon, has urged policymakers in the European Union to clarify the scope and intent of legislation targeting smart contracts. In an open letter published on April 17, Polygon Labs proposed amendments to Article 30 under the Data Act, requesting that it apply only to permissioned smart-contract-based systems owned and operated by an “enterprise,” rather than being applicable to permissionless systems as well. The platform highlighted that the current wording of the Data Act could inhibit innovation and economic growth in the EU.

Concerns Raised by Polygon Labs

Polygon Labs expressed concerns that the Data Act, as currently written, would not be enforceable for open, transparent, and permissionless parts of emerging blockchain technology, and could inadvertently hinder the growth and development of permissionless blockchain-based systems globally. The company urged EU lawmakers to consider revising Article 30 to avoid capturing these types of applications.

Similar Concerns from Other Experts

Other experts, including Michael Lewellen, head of solutions architecture at OpenZeppelin, have also raised concerns about the potential impact of the Data Act on smart contracts. Lewellen stated that the wording of the legislation, which allows for a “kill switch” for smart contracts, undermines immutability guarantees and introduces a point of failure.

Polygon’s Request for Consistency

Polygon Labs requested that the Data Act remain consistent with the Markets in Crypto-Assets framework, which is scheduled for a final vote on April 19 after extensive negotiations between the European Parliament, the European Council, and the European Commission. The company emphasized the need for careful consideration of the proposed amendments to Article 30 to ensure that the legislation aligns with the intended purpose of regulating smart contracts without hindering innovation in the blockchain space.

In conclusion, Polygon Labs has called on EU lawmakers to address the impact of the Data Act on smart contracts and to clarify the scope and intent of the legislation. The company has proposed amendments to ensure that the law does not inadvertently hinder the growth of permissionless blockchain-based systems, and has requested consistency with other relevant frameworks. It remains to be seen how EU policymakers will address these concerns and shape the final form of the Data Act.

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