In the letter, Polygon’s board requests amendments to Article 30 of the EU Data Act, which the board fears could stifle blockchain development in its current format.
The company behind Polygon, a Proof-of-Stake multi-chain blockchain platform around its ERC-20 token MATIC, has sent an open letter to representatives of the EU Parliament regarding Article 30 of the EU Data Act.
Unintended Consequences Of EU Policy
The EU Data Act, whose main purpose is to break up monopolies that companies tend to have regarding the data of its users, may have unforeseen consequences for blockchain developers, according to the letter.
1/ 🚨Today @0xPolygonLabs published an open letter to the EU on Art. 30 of the #DataAct, which could have serious consequences for permissionless smart contracts. @Ledger has joined in proposing amendments to narrow Art. 30 to protect decentralized software development. Read 👇
— Rebecca Rettig (@RebeccaRettig1) April 17, 2023
In its current form, the EU Data Act does not target blockchain development explicitly. In fact, the main targets of said legislation are companies that benefit from a treasure trove of Internet-of-Things (IoT) generated data that, for the most part, is made unavailable to parties with a legitimate interest that could help improve the quality of life of EU citizens through research and development powered by this currently inaccessible data.
However, Article 30 of the Act proposes amendments to blockchain smart contracts that, should they go into effect, could put decentralized platforms in legally questionable status.
Legislation Could Put Decentralization At Risk
Currently, the wording in Article 30 makes responsible the party offering smart contracts in the context of an agreement to make data available”. According to Polygon representatives, the current wording could make developers of decentralized platforms responsible for the improper use of smart contracts.
“Polygon Labs has an interest in this matter because we seek to ensure the growth and responsible development of permissionless blockchain-based systems globally. We respectfully request that you consider the proposed revisions to Art. 30 […] to ensure that this new law does not inadvertently capture open, transparent, and permissionless parts of emerging blockchain technology.”
Although a developer is, naturally, at fault if the smart contract built on their framework malfunctions, Polygon fears that the current wording would make developers liable for the misdeeds of a third party that could use a properly functioning smart contract for less-than-ideal purposes.
Furthermore, a second section of the legislation requests that developers creating smart contracts implement a kill switch that could stop problems from occurring. Although this sounds great in theory, it would be practically impossible to implement in a truly decentralized framework – not to mention that it could prove an easily targetable point of failure for bad actors.
In order to circumvent any possible issues, Polygon requests that the wording be amended before the Data Act goes into effect and that the laws already being voted on in the EU Markets in Crypto-Assets framework be followed for the time being.