Friday was a big day in tech history because it was the day that European Union (EU) negotiators finished writing the world’s first complete set of rules for AI, or more popularly, artificial intelligence.

This agreement, which has been named the “Artificial Intelligence Act,” is a big step toward giving the technology judicial oversight.

After intense talks behind closed doors, negotiators from the European Parliament and the EU’s 27 member states were able to work out their differences and reach a preliminary political deal on the AI Act.

The talks dealt with touchy topics, such as generative AI and how police use face recognition for spying. Thierry Breton, the European Commissioner, announced the breakthrough and emphasized the EU’s leading role as the first continent to set clear rules for its use.

Deal!#AIAct pic.twitter.com/UwNoqmEHt5

— Thierry Breton (@ThierryBreton) December 8, 2023

Even though there was a good result after marathon meetings that lasted more than 20 hours, civil society groups were not happy with the deal because they thought it didn’t have enough protections against harms that this type of technology could cause. They stressed the need for more technical details, which will be improved in the next few weeks.

Europe Takes Lead In AI Legislation

By releasing the first draft of its artificial intelligence rules in 2021, the EU had already taken the lead in creating AI rules around the world. But because of the rise in generative AI, European leaders had to change the plan, which was meant to be a model for the whole world.

In order to get official approval, the European Parliament is getting ready to vote on the AI Act in the first few months of the new year. If passed, the law wouldn’t go into effect until at least 2025. Penalties for breaking it would be very harsh, reaching up to 35 million euros ($38 million), or 7% of a company’s world turnover.

Individual generative AI systems, like OpenAI’s ChatGPT, have gotten a lot of attention for being able to create writing, images, and music that sounds so much like human work. Some people are worried that this could put jobs, privacy, copyright security, and even human life at risk.

While the EU, the U.S., the U.K., China, and other global groups are also making their own AI rules, the EU’s rules could be a powerful example for others to follow.

At first, the AI Act only went after certain AI functions based on their level of risk. Later, it expanded its reach to include foundation models, which are the complex systems that make general-purpose AI services like ChatGPT and Google’s Bard robot possible.

Even though there were some issues, the negotiators were able to find a balance on the foundation models. They added more requirements for technical documentation, following EU copyright law, risk assessment, incident reporting, cybersecurity steps, and sharing information about how efficient something is with energy.

Researchers warn that big tech companies might abuse strong foundation models, pointing out risks such as spreading false information online, hacking, making bioweapons, and manipulating people. The EU’s rules on AI could have an effect on rules around the world, serving as a model for other countries that want to regulate AI.

How Europe’s AI Rules Could Impact The Crypto Industry

The European Union’s (EU) decision to finalize the Artificial Intelligence Act has a big impact on the cryptocurrency industry. Specifically, laws pertaining to generative AI—like OpenAI’s ChatGPT—present important issues. These widely used technologies in the cryptocurrency industry may be subject to stricter regulations and inspection when it comes to automated blockchain platform activities and content production.

The AI Act’s emphasis on data security and privacy is in line with the need for safe transactions in the cryptocurrency industry. Crypto companies who do business in the EU must abide by these rules in order to avoid facing severe fines of up to 7% of their total revenue. This focus on compliance might lead to increased efforts inside the cryptocurrency sector to adhere to changing norms pertaining to AI.

The inclusion of foundation models in the AI Act, which are necessary for general-purpose AI services, has a direct impact on blockchain initiatives that include AI technology. Additionally, the worldwide impact of the EU’s legislation may influence the approaches taken by China and the United States, two other important participants in the crypto field, with regard to AI governance.

The EU’s innovative AI policies essentially expand their influence into the cryptocurrency sector, impacting data privacy standards, forming worldwide precedents for the junction of AI and cryptocurrencies, and influencing the integration of AI technologies. The AI Act will probably have a significant and wide-ranging impact on the changing cryptocurrency scene as it develops.

Featured image from Freepik