On June 28, the European Council and Parliament achieved a political consensus on the Data Act, which moves the legislation regarding non-personal data closer to fruition.
Thierry Breton, European Union commissioner for the internal market, described the agreement in an X post as a “milestone in the reshaping the digital space.”
Another deal! ⁰Tonight’s agreement on the #DataAct is a milestone in reshaping the digital space.
Thanks to the swift work of the EP @delcastillop & the Council Presidency, we are on the way of a thriving data economy that is innovative & open — on our conditions. pic.twitter.com/vTWUU8xTx9
The Data Act complements the Data Governance Act of November 2020 by clarifying who can create value from data and under which conditions. It stems from the European Strategy for Data, announced in February 2020, which also aims to position the EU as a regulatory frontrunner in the era of data-driven society.
The Data Act is part of the European Commission’s wider data strategy aimed at making Europe a global leader in the data-agile economy. In simple terms, the Data Act proposes new rules on who can access and use data generated in the EU across all economic sectors.
For the Data Act to become law, it must be approved by a vote of the European Parliament and the Council, which represent the bloc’s 27 member states. And once again, as with the Markets in Crypto-Assets (MiCA) regulation, the crypto sector is facing a major challenge. The problem raised by the new EU data law could permanently change the use of smart contracts in the European Economic Area (EEA) –– and not for the better.
Smart contract “kill switch”
The blockchain community is largely concerned about one provision in the Data Act, namely that automated data-sharing agreements contain a “kill switch” by which they could be terminated or halted in the event of a security breach.
Many blockchain experts contend that the current definition of smart contracts in the Data Act is broad, fearing it may lead to unintended consequences for existing smart contracts on public blockchains. For example, the text of the upcoming law doesn’t distinguish between just digital contracts and smart contracts utilizing distributed ledger technology.
But above all, the Data Act supposedly doesn’t give clear details about the conditions under which safe termination or interruption kill switch should occur, and it is hard to predict the potential outcomes with a higher degree of certainty. The smart contract architecture often doesn’t allow for termination or interruption, as blockchain technology is praised for being immutable and irreversible.
The Data Act also doesn’t say exactly what a “data sharing agreement” is, and it doesn’t explain if the smart contracts currently ubiquitous in Web3 applications follow these kinds of agreements.
“By design, most of smart contracts don’t offer a termination or interruption feature and are often un-upgradable to ensure higher levels of protection from abusive behaviors,” Marina Markežič, executive director and co-founder of European Crypto Initiative, told Cointelegraph.
“The fact that smart contracts lack such features puts their use and development at risk. They may be perceived as inconsistent with regulatory requirements.”
“The problem is if the scope of Article 30 were to be extended beyond the application of smart contracts in this narrowly defined context, and on public permissionless networks. It becomes not only problematic but almost impossible for such protocols to comply,” he said.
Per Voloder, another concern is whether these rules could spill over into decentralized finance (DeFi). “As we do not have a DeFi regulation, this is a question that will need an answer over the next 18 months as the EC prepares its position on DeFi.”
Moreover, kill switches can have errors because of human mistakes and, in smart contracts in general, “as they are rigid, bounded information environments.” This rigidity, plus an automatic feature that triggers a certain outcome following strict rules, could lead to issues like locking up assets, shutting down protocols or even losing funds and important data, said Voloder.
A lot of uncertainty
The Data Act has rules for vendors of an app using smart contracts, or for people whose business involves deploying smart contracts.
According to Markežič, the Data Act might cause such vendors and deployers to be more cautious and consider whether their smart contracts in any way contain a data-sharing agreement. Apps might need to change how they work to meet these rules if their smart contracts share data.
But first, it’s crucial to understand who exactly needs to follow these rules, Markežič said:
Erwin Voloder, head of policy at the European Blockchain Association, told Cointelegraph that Article 30 of the Data Act applies when parties agree to share data using a smart contract, and this contract follows the rules. It should be fine if it’s only for that situation, especially when used on a controlled network where the Data Act’s safety stop can be used.
“Is the regulation even targeted toward DeFi platforms and protocols? […] It should be clarified under what circumstances the ‘access control’ is provided, what, who, why and how the ‘safe termination or interruption’ measure is triggered and how protocols prevent further abusive behavior thereof.”
Markežič stated that, in the past, some changes and terminations were made on a protocol layer as part of the overall governance mechanisms.
A kill switch on the level of a smart contract might lump projects and individuals into “a single point of failure, prescribed by the regulators.”
Therefore, it’s critical that regulators clarify who has the power to use this kill switch.
Crypto community across the globe reacts
The crypto community has already proposed some alternative solutions to bring more legal clarity to smart contracts.
In April 2023, Polygon had already penned an open letter suggesting how to improve Article 30, sating that lawmakers could apply these rules to enterprises only, excluding software and developers, and make clear that smart contracts aren’t “agreements” in and of themselves.
More recently, the European Crypto Initiative and numerous organizations, such as Stellar, Iota, Polygon, Near, Coinbase, Cardano and ConsenSys, have signed an open letter voicing their concerns regarding the Data Act and calling on lawmakers to reconsider and clarify certain aspects.
We called on lawmakers to reconsider and clarify certain aspects of the #DataAct in our Open Letter, written with other 5 organisations and 55 signatories ✉️https://t.co/37IrdSsFXC
— European Crypto Initiative (@EuCInitiative) August 8, 2023
They argued that the Data Act could potentially clash with the recently agreed MiCA regulation. MiCA, which will come into force in 2024, provides a license for crypto exchanges and wallet providers to operate throughout the EU.
They further claim that European lawmakers deliberately sidestepped the more complex issue of decentralized financial regulation –– an issue the Commission will need to revisit in the coming years.
More harm than good?
The trialogue on the Data Act has been completed, and this means that the text has reached its final version and is likely to be enacted in its current form.
According to Markežič, the new law could affect the European crypto industry and businesses that want to operate in the EU, stating that the Data Act doesn’t give clear details about what use cases the new rules apply to, and that makes the whole industry unsure about what to expect. And this is just the first step in the direction of regulating smart contracts, setting a precedent for forthcoming actions, she said.
The next important step for the community is to work closely with European standardization groups. These groups are responsible for creating the standards that vendors and developers of smart contracts should follow when making agreements to share data, especially given that these vendors will need to make sure their smart contracts broadly align with the scope of Article 30.
According to Voloder, if the Data Act is extended to public networks, it could mean companies leaving the EU, at worst, and “otherwise being pigeonholed into a narrow development trajectory of smart contracts in the best case.”
“The result is capital flight, stifled innovation and a floundering blockchain industry in Europe. At a time when Europe is at the vanguard of the regulatory apex, the timing of such an outcome would be most inopportune.”
In one of his first appearances as the recently sworn-in chair of the US Securities and Exchange Commission, Paul Atkins delivered remarks to the agency’s third roundtable discussion of crypto regulation.
In the “Know Your Custodian” roundtable event on April 25, Atkins said he expected “huge benefits” from blockchain technology through efficiency, risk mitigation, transparency, and cutting costs. He reiterated that among his goals at the SEC would be to facilitate “clear regulatory rules of the road” for digital assets, hinting that the agency under former chair Gary Gensler had contributed to market and regulatory uncertainty.
“I look forward to engaging with market participants and working with colleagues in President Trump’s administration and Congress to establish a rational fit-for-purpose framework for crypto assets,” said Atkins.
SEC chair Paul Atkins addressing the April 25 crypto roundtable. Source: SEC
Some critics of US President Donald Trump see Atkins’ nomination to lead the SEC as a nod to the crypto industry, acting on campaign promises to remove Gensler — the former chair resigned the day Trump took office — and cut back on regulation. Democratic lawmakers on the Senate Banking Committee questioned Atkins on his ties to the industry, potentially presenting conflicts of interest in his role regulating crypto.
“We’ve noticed that we don’t have to be as concerned […] about being accused of things that we’re not doing, like being broker-dealers for securities,” Exodus chief legal officer Veronica McGregor, who participated in the roundtable, told Cointelegraph on April 24.”It’s just a less scary regulatory environment in general. It is, however, still unclear what the ultimate regs are going to look like for crypto.”
The SEC crypto task force is scheduled to hold two more roundtables in May and June to discuss tokenization and decentralized finance, respectively. Commissioner Hester Peirce, who leads the task force, told Cointelegraph in March that she welcomed the opportunity to work with Atkins to “reorient the agency,” hinting at an SEC with regulations more favorable to the crypto industry.
In addition to the roundtables, the crypto task force has reported several meetings with digital asset firms to discuss various policies and considerations in developing a regulatory framework.
Nasdaq has urged the US Securities and Exchange Commission (SEC) to hold digital assets to the same regulatory standards as securities if they constitute “stocks by any other name,” according to an April 25 comment letter.
The exchange said the US financial regulator needs to establish a clearer taxonomy for cryptocurrencies, including categorizing a portion of digital assets as “financial securities.” Those tokens, Nasdaq argued, should continue to be regulated “as they are regulated today regardless of tokenized form.”
“Whether it takes the form of a paper share, a digital share, or a token, an instrument’s underlying nature remains the same and it should be traded and regulated in the same ways,” the letter said.
It also proposed categorizing a portion of cryptocurrencies as “digital asset investment contracts,” to be subject to “light touch regulation” but still overseen by the SEC.
Nasdaq’s April 25 letter to the SEC. Source: Nasdaq
The SEC has dramatically pivoted its stance on cryptocurrency oversight since US President Donald Trump took office in January.
Under the leadership of former Chair Gary Gensler, the SEC took the position that practically all cryptocurrencies, with the exception of Bitcoin (BTC), represent investment contracts and therefore qualify as securities.
This stance led the agency to bring upwards of 100 lawsuits against crypto firms for alleged securities law violations.
However, under Trump nominee Paul Atkins, who was sworn in as chair on April 21 after a lengthy Senate confirmation, the SEC has claimed jurisdiction over a narrower segment of cryptocurrencies.
In February, the agency issued guidance stating that memecoins — if clearly identified as purely speculative assets with no intrinsic value — do not qualify as investment contracts pursuant to US law.
In April, the SEC said that stablecoins — digital tokens pegged to the US dollar — similarly do not qualify as securities if they are marketed solely as a means of making payments.
In its April 21 letter, Nasdaq said existing financial infrastructure “can readily absorb digital assets by establishing the proper taxonomy and calibrating certain rules to reflect what is truly new and novel about digital assets.”
The Depository Trust & Clearing Corporation (DTCC) — a private US securities clearinghouse closely overseen by the SEC — has been laying the foundation for integrating blockchain technology into regulated financial markets.
Cryptocurrency firms and centralized exchanges are launching more traditional investment offerings, bridging the divide between traditional financial and digital assets.
With investors seeking more flexible product offerings under one platform, the “line is blurring” between traditional finance (TradFi) and the cryptocurrency space, as the two financial paradigms signal a “growing synergy,” according to Gracy Chen, CEO of Bitget, the world’s sixth-largest crypto exchange.
In the wider crypto space, Securitize partnered with Mantle protocol to launch an institutional fund that will generate yield on a basket of diverse cryptocurrencies, similar to how traditional index funds track a mix of stocks.
The developments come after crypto investor sentiment staged a significant recovery, moving from “fear” to “neutral” for the first time since January 2025.
Investor sentiment was bolstered after US President Donald Trump said that import tariffs on Chinese goods will “come down substantially,” adopting a softer tone in negotiations for the first time since the reciprocal tariff announcement.
Crypto firms moving into Wall Street territory
Cryptocurrency firms and exchanges are increasingly moving into Wall Street territory, launching more traditional investment offerings and showcasing the increasing connection between crypto and traditional finance (TradFi).
“There’s a growing synergy between traditional financial investments and the emerging crypto space,” according to Gracy Chen, the CEO of Bitget, the world’s sixth-largest crypto exchange.
“Crypto players are now checking out traditional finance as they see the opportunity to bridge it,” Chen told Cointelegraph.
“The lines are blurring. Investors want flexibility, and products that can straddle both worlds are naturally attractive,” Chen said. “Some players see TradFi as a safety net; others, like Bitget, see it as a launchpad for broader adoption.” She added:
“In a volatile market, integration is smarter than isolation.”
Securitize, Mantle launch institutional crypto fund
Tokenization platform Securitize partnered with decentralized finance (DeFi) protocol Mantle to launch an institutional fund designed to earn yield on a diverse basket of cryptocurrencies, the companies said.
Similar to how a traditional index fund tracks a mix of stocks, the Mantle Index Four (MI4) Fund aims to offer investors exposure to cryptocurrencies, including Bitcoin (BTC), Ether (ETH), and Solana (SOL), as well as stablecoins tracking the US dollar, Securitize said in an April 24 announcement.
The fund also integrates liquid staking tokens — including Mantle’s mETH, Bybit’s bbSOL, and Ethena’s USDe — in a bid to enhance returns with onchain yield, according to the announcement.
Mantra says CEO has begun the process of burning his 150 million OM tokens
Mantra founder and CEO John Patrick Mullin has started unstaking 150 million of his Mantra (OM) tokens in preparation for sending them to a burn address in an attempt to restore the token’s value by tightening supply.
Mantra announced on April 21 that the unstaking process had begun, and would be completed by April 29, at which point Mullin’s Mantra (OM) tokens will be sent to the burn address and permanently removed from circulating supply.
Mullin said it was a “first step in rebuilding trust with the community, but far from the last.”
Mantra said it was also in talks with “key ecosystem partners” about burning a further 150 million OM to bring the total burn amount to 300 million.
With 150 million fewer OM, Mantra’s total supply will decline to 1.67 billion, and its number of staked tokens will drop by over 26% to 421.8 million OM from 571.8 million OM.
Symbiotic raises $29 million for staking-based universal coordination layer
Cryptocurrency staking protocol Symbiotic closed a $29 million Series A funding round led by Web3-focused investment firms, including Pantera Capital and Coinbase Ventures, to support the launch of a new economic coordination layer for blockchain security.
The round included more than 100 angel investors, with participation by major industry players Aave, Polygon and StarkWare, the company said in an April 23 announcement shared with Cointelegraph.
The closing of the funding round also marks the launch of Symbiotic’s Universal Staking Framework, which aims to be an economic coordination layer that bolsters blockchain security via staking.
The new staking layer enables the use of any combination of cryptocurrencies to secure networks, including monolithic and modularlayer-1 and layer-2 blockchains, the announcement said.
“We’ve created a modular framework that lets protocols evolve security models over time while efficiently coordinating risk,” Misha Putiatin, co-founder of Symbiotic, told Cointelegraph. “This empowers protocols at every stage of their lifecycle to evolve their security models seamlessly without rebuilding infrastructure.”
The US Securities and Exchange Commission (SEC) delayed a decision on whether to approve a proposed exchange-traded fund (ETF) holding Polkadot’s native token, regulatory filings show.
According to an April 24 filing, the regulator has extended its deadline for a final ruling until June 11, nearly four months after the Nasdaq sought permission to list Grayscale Polkadot Trust on Feb. 24.
Grayscale’s ETF filing adds to a roster of about 70 proposed ETFs awaiting SEC approval, including funds holding altcoins, memecoins and crypto-related financial derivatives, according to Bloomberg Intelligence.
Asset managers are pitching ETFs for “[e]verything from XRP, Litecoin and Solana to Penguins, Doge and 2x Melania and everything in between,” Bloomberg analyst Eric Balchunas said in an April 21 post on the X platform. Asset manager 21Shares is also awaiting permission to list its own Polkadot ETF.
According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization ended the week in the green.
The Official Trump (TRUMP) token rose over 73% as the week’s biggest gainer, after the president announced an exclusive in-person dinner for the top tokenholders. The Sui (SUI) token rose over 69% as the week’s second-best performing token.
Total value locked in DeFi. Source: DefiLlama
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.