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HomeCryptoEurope Unveils Smart Contract 'Off Switch': What This Means for DeFi Systems ...

Europe Unveils Smart Contract ‘Off Switch’: What This Means for DeFi Systems money moguls


  • The new European legislation promotes the control of crypto and blockchain technology through smart contracts.
  • The crypto community raised concerns about the risk of smart contract kill switch mandates.

european regulator Are turning up the heat on crypto and blockchain regulation like their American counterparts. The recently passed Act of the European Parliament has a clause that seeks to impose more controls on smart contracts.

Article 30 Law of the European Parliament He touched on regulatory guidelines regarding smart contracts. The clause required the parties to offer smart contracts to provide robust controls that could prevent third-party tampering or functional errors. While this section sounds great, it’s the second part that may be controversial.

smart contract kill switch

Clause B of Article 30 requires smart contract providers to include control mechanisms to terminate transaction execution. In other words, the mechanism will provide some level of control to allow the interruption or pause of the smart contract. Such features can act as a double-edged sword. For example, they may offer a layer of third-party control through which regulators can determine or monitor usage.

The purpose of section B is to add an additional layer of security, specifically against vulnerabilities. This approach can present some contradictions about DeFi. Smart contracts are believed to provide autonomy in transactions, thus eliminating third parties. This means that developers must consider the factors that prevent vulnerabilities.

Allowing third parties to control negates the whole idea of โ€‹โ€‹self-executing smart contracts. Article 30 could effectively grant immunity to the European government to shut down DeFi. so bet new concerns in the DeFi community.

The second wave of war against the crypto market

as mentioned earlier, US regulator Kik started the war on cryptocurrency in February by ordering banks to halt cryptocurrency transactions. This newly passed bill could outline the next wave of the war on cryptocurrencies. This time, the battle is headed squarely towards the technology that underpins the crypto industry.

No one yet knows if these efforts will hurt the market. This may not be necessary due to jurisdiction. It would be difficult for governments to enforce such mandates on decentralized technologies and even more difficult to shut down such technologies. The most immediate danger associated with such developments is FUD. But at this point, the market has already taken a hit, and this new effort may not have much of an impact.


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