The European Union's plans to regulate crypto smart contracts, the infrastructural underpinnings of decentralized finance, look to be heading in a less onerous direction. 

After lawmakers in the European Parliament reached agreement on a new text of the Data Act, the article on smart contracts shed some of its weight and reduced its scope, a draft proposal obtained by The Block shows.

The draft shows that sellers or offerers of smart contracts, for example, will no longer need to perform a conformity assessment and sign a mandatory declaration that they comply with EU requirements. Expectations for smart contracts to meet so-called harmonized standards, or technical compliance specifications, were also dropped. 

The text also reduces the scope to only cover “the contractual party offering a smart contract,” instead of a broader group covering vendors or professionals involved in the deployment of smart contracts.

The EU plans to regulate smart contacts under its broader strategy on data markets. The legislation is likely to have far-reaching effects on crypto, as such contracts — written in software code — underpin the infrastructure of DeFi. 

(By Inbar Preiss)