The European Parliament (EP) has passed a bill requiring smart contracts to contain a so-called “kill switch.” The purpose of a kill switch is to enable authorities to stop or modify the execution of smart contracts in the event of illegal activity, security breaches, or other unforeseen events. Does this jeopardize the existence of smart contracts?
EU Introduces New Cryptocurrency Law
The legislation hopes to enhance consumer protection and prevent fraud in the fast-growing field of decentralized finance (DeFi) and other blockchain applications. Smart contracts are self-executing programs stored on the blockchain that automate the process of exchanging value or other assets. A Crypto protocol.
While smart contracts have the potential to revolutionize many industries, they are not foolproof. Bugs, bugs, or vulnerabilities in code can have major negative consequences, as has been seen with multiple DeFi hacks over the years.
Smart contract developers must allow external auditors to review their code for bugs and vulnerabilities, according to a new EU law. This requirement aims to ensure that smart contracts are safe, secure and comply with existing regulations.
The bill has broad support from lawmakers who recognize the importance of regulating the fast-growing world of DeFi and blockchain. MEPs leading the draft bill said the legislation would provide much-needed legal certainty to companies and individuals using smart contracts.
Is the kill switch going too far?
The new EU bill is the latest development in the regulatory trend of the global cryptocurrency and blockchain industry. Several other countries, including the United States and Japan, have implemented or are planning to implement regulations aimed at promoting innovation while protecting consumers.
However, some critics of the EU bill argue that the kill switch requirement goes against the decentralized nature of blockchain technology. Such demands, they argue, could lead to centralization and return the government to power, which is unpopular.
Source of information: Compiled from CRYPTO-INSIDERS by 0x Information.The copyright belongs to the author Roy van Krieken and may not be reproduced without permission