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European Parliament passes Data Law with implications for encryption industry

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European Parliament passes Data Law with implications for encryption industry

It is reported that on Tuesday, local time, the European Parliament passed the relevant legislation of the Data Law with 500 votes in favour and 23 against. The legislation and its provisions on smart contracts are not specifically targeted at the encryption industry, but some people in the industry worry that if the scope is not clearly defined, the data law may have a far-reaching impact on encryption, especially in the area of smart contracts. It is reported that smart contracts belong to the provisions of Article 30 of the EU Data Law, namely “basic requirements for smart contracts for data sharing”. The provisions include “strict access control mechanism” and trade secret protection integrated into the design of smart contracts. It is necessary to have the possibility of terminating or interrupting the transaction mechanism, and the legislator needs to decide under what conditions it is allowed to terminate or interrupt the transaction. （The Block）

The European Parliament regulates smart contracts according to the data law

Analysis based on this information:


The European Parliament recently passed the Data Law with an overwhelming majority of 500 in favour and 23 against. Although the legislation and its provisions on smart contracts are not specifically targeting the encryption industry, some individuals within the industry are worried that the Data Law’s scope may have a far-reaching impact on encryption, especially on smart contracts, if the scope is not clearly defined.

Smart contracts fall under the provisions of Article 30 of the EU Data Law, which outlines the “basic requirements for smart contracts for data sharing.” Smart contracts must include a “strict access control mechanism,” and trade secret protection should be integrated into their design. The law requires that there be a mechanism to terminate or interrupt transactions and that the legislator determine under what circumstances these actions are allowed.

The concern from those in the encryption industry comes from the potential impact on privacy, as smart contracts can contain sensitive personal information. While the legislation does not seem to target the industry in particular, there is a fear that it could be interpreted that way, leading to unintended consequences.

Trade secret protection is another major concern for the encryption industry. The Data Law’s provisions on smart contracts could potentially lead to the creation of more standardized contracts with fewer opportunities for businesses to tailor their contracts to their needs. This could lead to a decrease in trade secret protection, and businesses might then need to rely on other forms of protection, such as patents, copyrights, or trademarks.

Overall, while the European Parliament’s passing of the Data Law represents a step forward in protecting personal data, there are concerns regarding the impact on the encryption industry due to potentially unclear language in the legislation. The industry is eager for further clarification and definition of the laws and regulations that will impact them.

In conclusion, the passing of the Data Law by the European Parliament appears to be a positive move towards protecting personal data. However, the broad nature of the legislation and its provisions on smart contracts may unintentionally impact the encryption industry. It will be necessary to carefully define and interpret the laws to minimize negative impacts, ensure robust trade secret protection, and ensure that businesses have the flexibility to tailor their contracts to their needs.

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