Polygon, a leading blockchain platform, has written an open letter to the EU Parliament, seeking amendments to the Data Act. The letter urges the Parliament to consider the unique features of blockchain technology, particularly in regards to data protection and privacy, and revise the current legislation accordingly. The company believes that blockchain technology can provide more secure and decentralized ways of handling personal data, and the law should facilitate rather than hinder this. The move is expected to bring positive changes to the EU’s data protection landscape, with more transparency and greater protection of users’ information.
Polygon Requests Amendments to EU Data Act to Protect Decentralized Development
Polygon, the company behind the Proof-of-Stake multi-chain blockchain platform, has sent an open letter to representatives of the EU Parliament regarding Article 30 of the EU Data Act. In the letter, Polygon’s board requests amendments to Article 30, which the board fears could stifle blockchain development in its current format.
The EU Data Act aims to break up monopolies that companies tend to have regarding the data of its users. However, according to Polygon, the Article 30 amendments could put decentralized platforms in a legally questionable position. Although the EU Data Act does not target blockchain development specifically, Article 30 proposes amendments to blockchain smart contracts that could put decentralization at risk.
Polygon representatives believe that the current wording in Article 30 makes developers of decentralized platforms liable for the misdeeds of a third party that could use a properly functioning smart contract for less-than-ideal purposes. The legislation also requests that developers creating smart contracts implement a kill switch to stop potential problems from occurring. Polygon fears that this is not practical for a truly decentralized system and could prove to be an easily targetable point of failure for bad actors.
To ensure the growth and responsible development of permissionless blockchain-based systems globally, Polygon requests that the wording of the EU Data Act be amended before it goes into effect. Polygon also suggests that the laws already being voted on in the EU Markets in Crypto-Assets framework should be followed for the time being.
Possible Issues With Article 30
Article 30 of the EU Data Act needs to be amended to ensure that it does not inadvertently capture open, transparent, and permissionless parts of emerging blockchain technology. Polygon Labs, for example, seeks to ensure the growth and responsible development of permissionless blockchain-based systems globally. However, the current wording could make developers of decentralized platforms responsible for the improper use of smart contracts.
If the current wording were to go into effect, developers would be liable for the misdeeds of a third party that uses their smart contract. This would make it challenging for developers to innovate and create decentralized applications that are safe for all users.
Another section of the legislation requests that developers creating smart contracts implement a kill switch. This could prove to be a significant point of failure for bad actors and could put decentralization at risk. Therefore, Polygon suggested that the wording be amended before the Data Act goes into effect, and the laws already being voted on in the EU Markets in Crypto-Assets framework be followed for the time being.
Protecting Decentralized Development
Polygon’s letter serves as a reminder of the unintended consequences of enacting regulations that could stifle blockchain development. It also highlights the importance of ensuring that regulations are tailored to support innovation and growth while maintaining security and keeping users safe.
To ensure that the blockchain industry continues to grow responsibly, it is crucial that legislators work with industry experts to create regulations that are practical and beneficial for everyone. Only then can we avoid unintended consequences that could stifle innovation and the development of decentralized technologies.