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EU parliament approves world’s most sweeping cryptocurrency rules

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The EU hopes the cryptoasset regulations will whip an industry into shape that has been beset by scandals and failures
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The European Parliament approved the world’s first comprehensive rules to regulate the “Wild West” world of cryptocurrencies on Thursday, hoping to protect investors against abuse and manipulation.

EU member states have already backed the legislation covering cryptoassets, which include cryptocurrencies such as bitcoin and ethereum and other tradable tokens whose value is secured using blockchain technology, such as NFTs.

The rules, now approved by a large majority of European lawmakers, hope to whip into shape an industry that has been beset by scandals and failures.

One of the most recent cryptocurrency exchange failures came in November when the FTX platform and its sister trading house Alameda Research went bankrupt, dissolving a virtual trading business that at one point had a market value of $32 billion.

The EU commissioner for financial services, Mairead McGuinness, said during a parliamentary debate on Wednesday that the rules would have regulated FTX’s activities and perhaps prevented its collapse at great cost to some investors.

Under the regulation known as Markets in Crypto Assets (MiCA), cryptoasset service providers (CASPs) must protect customers’ digital wallets and will be liable if they lose investors’ cryptoassets.

“We believe that had FTX, for example, been captured under EU jurisdiction, many of its practices would not have been permissible under MiCA,” McGuinness said in Strasbourg.

Large providers will also have to disclose their energy consumption as part of the EU’s efforts to reduce cryptocurrencies’ high carbon footprint.

A second regulation on fund transfers will lead to greater oversight of cryptoassets trades, bringing it more closely into line with practices traditional finance.

The EU says this will make it harder for criminals to use cryptocurrencies for illegal activity such as money laundering.

The regulations “mark the end of the Wild West era for the unregulated world of cryptoassets”, Ernest Urtasun, one of the EU lawmakers spearheading the legislation through parliament, said during the debate.

“For over a decade, the lack of regulation has resulted in massive losses to many first-time investors and provided a safe haven for fraudsters and international criminal networks,” he added.

– Creating ‘safer environment’ –

Some have, however, criticised the draft legislation for not going far enough.

“In line with the principle of proportionality, significant CASPs should be subject to both stricter requirements and enhanced supervision: neither of the two is catered for by MiCA,” Elizabeth McCaul, European Central Bank supervisory board member, wrote in a blog post this month.

There have also been claims that the regulation would block innovation but McGuinness dismissed the suggestion.

“What we believe is that having a regulatory framework allows the industry to evolve in a more cohesive and safer environment,” she said.

She added that she hoped the rules would become a model for other countries.

The rules will progressively come into force from July 2024 after EU member states formally nod them into law. 

The EU is also preparing to introduce proposals for a digital euro later this year.

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California looks to Europe to rein in AI

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Legislators in the California state capitol are working on a flurry of laws aiming to crack down on abusive uses of artificial intelligence on the home turf of some of the world's powerful tech titans
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California, home to Silicon Valley, is eager to rein in the deployment of artificial intelligence and is looking to Europe’s tough-on-big-tech approach for inspiration.

The richest state in the United States by GDP, California is a hotbed of no-holds-barred tech innovation, but lawmakers in state capital Sacramento want to give the industry laws and guardrails it has largely been spared in the internet age.

Brussels has enacted a barrage of laws on US-dominated tech and sprinted to pass the AI Act after OpenAI’s Microsoft-backed ChatGPT arrived on the scene in late 2022, unleashing a global AI race.

“What we’re trying to do is actually learn from the Europeans, but also work with the Europeans, and figure out how to put regulations in place on AI,” said David Harris, senior policy advisor at the California Initiative for Technology and Democracy.

As they have in the past with EU laws on private data, lawmakers in California are looking to recent European legislation on AI, especially given the little hope of equivalent national legislation out of Washington.

There are at least 30 different bills proposed by California state legislators that relate to various aspects of AI, according to Harris, who said he has advised officials here and in Europe on such laws.

Proposed laws in California range from requiring AI makers to reveal what was used to train models to banning election ads containing any computer generated features.

“One of the aspects I think is really important is the question of how we deal with deepfakes or fake text created to look like a human being is sending you messages,” Harris told AFP.

State assembly member Gail Pellerin is backing a bill she says would essentially ban the spreading of deceptive digital content created with generative AI in the months leading up to and the weeks following an election.

“Bad actors who are utilizing this are really hoping to create chaos in an election,” Pellerin said.

– Law-breaking ‘bad guys’ –

Industry association NetChoice is dead set against importing aspects of European legislation on AI, or any other EU tech regulation.

“They are taking, essentially, a European approach on artificial intelligence – which is that we must ban the technology,” said Carl Szabo, the general counsel of the association, which advocates for light touch regulation of tech.

“Outlawing AI won’t stop (anything). It’s bad because bad guys don’t follow the law,” Szabo argued.

“That’s what makes them bad guys.”

US computer software giant Adobe, like most tech giants, worked with Europe on the AI Act, according to Adobe General Counsel and Chief Trust Officer Dana Rao.

At the heart of the EU AI Act is a risk-based approach, with AI practices deemed more risky getting more scrutiny.

“We feel good about where the AI Act ended up” with its high-risk, low-risk approach, said Rao.

Already, Adobe engineers carry out “impact assessments” to rate risk before making AI products available, according to Rao.

“You want to think about nuclear safety, about cybersecurity, about when AI is making substantial decisions over human rights,” Rao said.

– ‘Watching California’ –

In California, Rao said he expected the problem of deepfakes to be the first to fall under the authority of a new law.

Assembly Bill 602 would criminalize non-consensual deepfake pornography while Assembly Bill 730 bans the use of AI deepfakes during election campaign season.

To fight this, Adobe joined other companies to create “content credentials” that Rao equated to a “nutrition label” for digital content.

Assemblywoman Pellerin expects AI laws adopted in California to be replicated in other states.

“People are watching California,” Pellerin said, with a slew of US states also working on their own AI deepfake bills.

“We’re all in this together; we have to stay ahead of the folks that are trying to wreak havoc in an election,” she said.

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Big tech told to identify AI deepfakes ahead of EU vote

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EU parliamentary elections are taking place in the bloc's 27 member states on June 6-9
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The EU called on Facebook, TikTok and other tech titans on Tuesday to crack down on deepfakes and other AI-generated content by using clear labels ahead of Europe-wide polls in June.

The recommendation is part of a raft of guidelines published under a landmark content law by the European Commission for digital giants to tackle risks to elections including disinformation.

The EU executive has unleashed a string of measures to clamp down on big tech, especially regarding content moderation.

Its biggest tool is the Digital Services Act (DSA) under which the bloc has designated 22 digital platforms as “very large” including Instagram, Snapchat, YouTube and X.

There has been feverish excitement over artificial intelligence since OpenAI’s ChatGPT arrived on the scene in late 2022, but the EU’s concerns over the technology’s harms have grown in parallel.

Brussels especially fears the impact of Russian “manipulation” and “disinformation” on elections taking place in the bloc’s 27 member states on June 6-9.

In the new guidelines, the commission said the largest platforms “should assess and mitigate specific risks linked to AI, for example by clearly labelling content generated by AI (such as deepfakes)”.

The commission recommends that big platforms promote official information on elections and “reduce the monetisation and virality of content that threatens the integrity of electoral processes” to diminish any risks.

“With today’s guidelines we are making full use of all the tools offered by the DSA to ensure platforms comply with their obligations and are not misused to manipulate our elections, while safeguarding freedom of expression,” said the EU’s top tech enforcer, Thierry Breton.

While the guidelines are not legally binding, platforms must explain what other “equally effective” measures they are taking to limit the risks if they do not adhere to them.

The EU can ask for more information and if regulators do not believe there is full compliance, they can hit the firms with probes that could lead to hefty fines.

– ‘Trusted’ information –

Under the new guidelines, the commission also said political advertising “should be clearly labelled as such” before a tougher law on the issue comes into force in 2025.

It also urges platforms to put in place mechanisms “to reduce the impact of incidents that could have a significant effect on the election outcome or turnout”.

The EU will conduct “stress-tests” with relevant platforms in late April, it said.

X has already been under investigation since December over content moderation.

And the commission on March 14 pressed Facebook, Instagram, TikTok and four other platforms to provide more information on how they are countering AI risks to polls.

In the past few weeks, several of the companies including Meta have outlined their plans.

TikTok on Tuesday announced more of the measures it was taking including push notifications from April that will direct users to find more “trusted and authoritative” information about the June vote.

TikTok has around 142 million monthly active users in the EU — and is increasingly used as a source of political information among young people.

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Ousted WeWork co-founder bids to buy company: reports

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The pandemic exacerbated WeWork's woes as people avoided offices for fear of Covid-19
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Ousted WeWork co-founder Adam Neumann recently bid more than $500 million to buy back the struggling office-sharing group, according to media reports Monday.

Neumann recently submitted the offer, but it was not clear how he would finance such a deal, the Wall Street Journal and CNBC reported, citing sources close to the matter.

Neumann is seeking to buy the company out of bankruptcy, according to a letter to WeWork seen by AFP last month.

WeWork went into bankruptcy in November with its major creditors set to take control of the company.

At its height, WeWork was the biggest private renter of office space in Manhattan, with co-working spaces in cities across the globe.

But investors became concerned not only about WeWork’s business model and unbridled growth, but also about Neumann’s reliability as a boss.

A charismatic figure, Neumann was known for his sometimes abrupt decisions.

In September 2019, the Board of Directors dismissed him, shortly after the company’s stock market debut was postponed. 

Neumann was forced out of the company with a $1.7 billion exit package, while the company’s value was slashed to $8 billion.

WeWork was then disrupted by the Covid-19 pandemic, which emptied offices as workers went remote, and the company never fully recovered.

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