EU Regulations requiring “termination switches” on smart contracts may limit industry standards, says Thierry Breton
On March 15th, Thierry Breton, the EU\’s internal market specialist, told reporters on Tuesday that controversial EU regulations require \”termination switches\” t
On March 15th, Thierry Breton, the EU’s internal market specialist, told reporters on Tuesday that controversial EU regulations require “termination switches” to be set for certain smart contracts, which may limit the key ability to set standards for the industry.
EU official: The smart contract plan of the European Parliament limits the development of unified standards
Analysis based on this information:
On March 15th, Thierry Breton, the EU’s internal market specialist, made a statement regarding the EU regulations that require “termination switches” to be set for certain smart contracts. According to Breton, these regulations, although intended to increase security of transactions, can limit the industry’s ability to set standards.
Smart contracts are legal agreements that use blockchain technology to make the terms of a contract self-executing and enforceable. In other words, once the conditions of the contract are met, the contract automatically executes without the need for human intervention. These contracts have gained popularity because they remove the need for intermediaries, thereby reducing fees and decreasing the time taken to settle transactions.
However, as with any new technology, smart contracts come with their own set of risks. A contract that is self-executing can be especially dangerous if the terms are not correctly specified, leading to unintended consequences. To address these risks, the EU has put in place regulations that require smart contracts to have “termination switches”. These termination switches provide a way to stop the execution of a smart contract in case something goes wrong.
While these requirements are in place to increase the security of smart contracts, Breton argues that they may limit the industry’s ability to set standards. The termination switches required by the regulations may be different for each smart contract, leading to inconsistencies between contracts. These inconsistencies can make it difficult to compare and evaluate different smart contracts, leading to decreased transparency in the industry. In addition, the added complexity of termination switches can make smart contracts less attractive to use, leading to decreased adoption.
Overall, the EU regulations requiring “termination switches” on smart contracts is a step towards increasing the security of transactions. However, as with any regulation, it may have unintended consequences on the industry. As the industry moves towards wider adoption of smart contracts, it will be important to carefully evaluate the effects of regulations on the industry as a whole.
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