Members of the European Parliament voted Thursday to approve a Data Act containing a controversial clause that could make most smart contracts unlawful.

The act, which establishes rules on the sharing of data, received 481 votes in favor and 31 votes against, according to a press release. The legislation now needs formal approval from the European Council, a body comprising the 27 member nations' heads of state.

The final version of the bill, reviewed by CoinDesk in July, contained a provision requiring automated data-sharing agreements to be capable of being safely terminated. The July 7 text referred broadly to “smart contracts” rather than to privately owned and permissioned data records. Smart contracts are tools that automatically execute transactions when certain conditions are met. Organizations linked to blockchains like Stellar, Polygon, NEAR and Cardano expressed their concerns in an open letter at the time.

Regulations Crypto EU Data smart contracts Legislation EU Parliament

Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. Previously, Shumba interned at Business Insider and Bloomberg. Camomile has featured in Harpers Bazaar, Red, the BBC, Black Ballad, Journalism.co.uk, Cryptopolitan.com and South West Londoner. Shumba studied politics, philosophy and economics as a combined degree at the University of East Anglia before doing a postgraduate degree in multimedia journalism. While she did her undergraduate degree she had an award-winning radio show on making a difference. She does not currently hold value in any digital currencies or projects.