Friday marked a significant milestone in the history of technology as European Union (EU) negotiators finalized the world's first comprehensive set of regulations for artificial intelligence (AI). This landmark agreement, known as the "Artificial Intelligence Act," represents a major stride towards establishing judicial oversight for this transformative technology. Europe introduces first AI regulations, impact on crypto industry.
Following intense discussions behind closed doors, negotiators from the European Parliament and the EU's 27 member states successfully resolved their differences and reached a preliminary political consensus on the AI Act. These negotiations addressed sensitive topics, including generative AI and the use of facial recognition by law enforcement agencies for surveillance purposes. Thierry Breton, the European Commissioner, announced this breakthrough and underscored the EU's pioneering role as the first continent to establish clear regulations governing the use of AI.
Despite the positive outcome of these marathon meetings, which lasted over 20 hours, civil society groups expressed dissatisfaction with the agreement, arguing that it lacked sufficient safeguards against potential harms associated with this type of technology. They emphasized the need for more detailed technical provisions, which will be further refined in the coming weeks.
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Europe Takes Lead In AI Legislation
By releasing the first draft of its artificial intelligence rules in 2021, the EU has positioned itself as a global leader in establishing regulations for AI. However, due to the increasing prevalence of generative AI, European leaders have had to revise their original plan, which was intended to serve as a model for the rest of the world.
To gain official approval, the European Parliament is preparing to vote on the AI Act in the early months of the upcoming year. If passed, the law would not come into effect until at least 2025. Violations of the act would result in severe penalties, with fines of up to 35 million euros ($38 million) or 7% of a company's worldwide turnover.
Individual generative AI systems, such as OpenAI's ChatGPT, have garnered significant attention for their ability to produce written content, images, and music that closely resemble human work. However, concerns have been raised regarding the potential impact on employment, privacy, copyright protection, and even human safety.
While various global groups such as the EU, the U.S., the U.K., and China are formulating their own regulations on artificial intelligence (AI), the rules established by the EU could serve as a compelling example for others to emulate. Initially, the AI Act targeted specific AI functions based on their level of risk. However, it has since expanded its scope to encompass foundation models, which are intricate systems enabling the provision of general-purpose AI services like ChatGPT and Google's Bard robot.
Although there were some challenges, negotiators managed to strike a balance regarding the regulation of foundation models. They introduced additional requirements for technical documentation, compliance with EU copyright law, risk assessment, incident reporting, cybersecurity measures, and disclosure of energy efficiency. Researchers caution that major tech companies may exploit powerful foundation models, thereby posing risks such as the dissemination of false information online, hacking, the development of bioweapons, and manipulation of individuals. The AI regulations implemented by the EU have the potential to influence global AI governance, serving as a blueprint for other nations seeking to establish their own regulatory frameworks.
How Europe’s AI Rules Could Impact The Crypto Industry
The finalization of the Artificial Intelligence Act by the European Union (EU) is expected to have a significant impact on the cryptocurrency industry. Specifically, there are important considerations regarding generative AI technologies, such as OpenAI's ChatGPT. These widely used technologies in the cryptocurrency industry may be subject to stricter regulations and inspections, particularly in relation to automated blockchain platform activities and content production.
The AI Act's focus on data security and privacy aligns with the need for secure transactions in the cryptocurrency industry. Crypto companies operating within the EU must comply with these regulations to avoid substantial fines of up to 7% of their total revenue. This emphasis on compliance may drive increased efforts within the cryptocurrency sector to adapt to evolving norms concerning AI.
The inclusion of foundation models in the AI Act, which are essential for general-purpose AI services, directly impacts blockchain initiatives that incorporate AI technology. Furthermore, the global influence of the EU's legislation may shape the approaches taken by other significant participants in the crypto field, such as China and the United States, in terms of AI governance.
The EU's forward-thinking AI policies extend their influence into the cryptocurrency sector, affecting data privacy standards, establishing global precedents for the intersection of AI and cryptocurrencies, and influencing the integration of AI technologies. As the cryptocurrency landscape continues to evolve, the AI Act is expected to have a substantial and wide-ranging impact.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.