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European Parliament Approves Groundbreaking AI Regulations

European Union legislators in the European Parliament have endorsed the preliminary agreement on groundbreaking regulations for artificial intelligence (AI) on February 13, paving the way for the world’s first AI-focused legislation. The Internal Market and Civil Liberties Committees voted 71-8 to support the provisional agreement on the AI Act, which aims to establish guidelines for AI implementation across various sectors, including banking, automotive, security, and law enforcement. The regulations cover areas such as foundational models or generative AI, with provisions for copyright protection and safeguards against AI applications that threaten citizens' rights. Following member states' approval and concessions to alleviate administrative burdens, the AI Act is set to proceed to a parliamentary vote in April, with potential full implementation expected within 24 months. The endorsement of the AI Act by the European Parliament marks a significant milestone in global AI...

Kraken Implements Self-Custodial Wallet Verification Requirement for UK Users

Kraken, a prominent cryptocurrency exchange, has initiated a verification process for its users in the United Kingdom, mandating verification of their self-custodial wallets. The move, reportedly driven by UK regulations, requires users to confirm ownership or control of their self-custodial wallets used for cryptocurrency transactions. Failure to comply by February 23, 2024, will lead to restrictions on the affected accounts. This action mirrors a broader trend among exchanges, aligning with increasing regulatory scrutiny on entities involved with digital assets. However, the challenge of verifying self-custodial wallets raises questions about privacy and regulatory compliance as regulators extend know-your-customer (KYC) regulations to cover such entities, highlighting ongoing debates in the crypto space.

European Court of Human Rights Upholds Encryption Privacy in Landmark Ruling

The European Court of Human Rights has ruled against the demand for decryption of end-to-end encrypted (E2EE) messages in a case involving Telegram, emphasizing that creating backdoors to such services would threaten freedom of expression and expose innocent users to privacy breaches. The judgment, issued on Feb. 13, favored Telegram user Anton Podchasov, who contested his government's request to decrypt messages sent via the app's encrypted "secret chat" feature. The court highlighted that while encryption may be used by criminals to evade law enforcement, compromising encryption for everyone would endanger individuals' rights while enabling indiscriminate surveillance. The ruling underscored the importance of encryption in safeguarding privacy and freedom of expression, emphasizing alternative methods for monitoring encrypted communications that don't require encryption backdoors. The importance of encryption in protecting privacy and freedom of expression, rejecting demands for...

Federal Reserve Chairman Urges Congressional Action on CBDC and Stablecoin Regulation

Federal Reserve Chairman Jerome Powell emphasized the need for congressional authorization for a central bank digital currency (CBDC) and called for stablecoin legislation during a closed-door meeting with House Financial Services Committee members. Powell stressed that any decision to introduce a CBDC would require approval from Congress, highlighting ongoing research and public engagement on the topic. He also expressed support for establishing a regulatory framework for stablecoins and welcomed upcoming legislative efforts in this area.

The Glenlivet Launches 50-Year-Old Whiskey Collection with NFTs and AI Labels

To mark its 200th anniversary, The Glenlivet distillery in Scotland has unveiled "The Twelve Elements," a collection of 50-year-old whiskeys. This release incorporates blockchain technology via NFTs and utilizes generative AI for label design, blending tradition with innovation. Each bottle in the collection is paired with a unique NFT on the Ethereum blockchain, providing irrefutable proof of ownership through The Whisky Exchange's Cabinet marketplace. Generative AI designs one-of-a-kind labels based on each whiskey's respective element, offering a modern twist to the traditional art of whiskey labeling. The integration of NFTs and AI reflects a broader trend in the NFT landscape, where experts anticipate a shift towards utility and real-world applications beyond mere collectibles. Major brands like Mastercard, Budweiser, and Nike are also exploring the potential of NFTs for increasing transparency, traceability, and authenticity. The collection will be auctioned starting February...

Isle of Man Opens Consultation on Crypto Regulation Amid AML/CFT Concerns

The Isle of Man, renowned for its status as an offshore financial center, has initiated a public consultation regarding the future of its cryptocurrency regulation. The local Financial Service Authority (FSA) released a discussion paper on Feb. 13, focusing on overseeing "certain crypto-asset activities" for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) purposes. While the Island's National Risk Assessment highlights significant AML/CFT risks associated with crypto-related businesses, the majority of such firms are already subject to AML/CFT legislation. FSA recognizes the need for tighter regulation to address potential consumer risks, particularly for retail customers. The discussion paper outlines various options for crypto regulation, including maintaining the current framework under the Designated Businesses (Registration and Oversight) Act 2015. However, the FSA views this approach as insufficient for adequately protecting consumers from potential...

Block Earner Faces Legal Action for Unlicensed Crypto Lending in Australia

The Federal Court of Australia has ruled against Block Earner, also known as Web3 Ventures Pty Ltd, for offering its 'Earner' cryptocurrency lending product without obtaining the required Australian Financial Services License. However, the court allowed the company to continue offering its 'Access' product, which involved wrapping DeFi yields from platforms like AAVE and Compound, as the regulatory body failed to adequately prove its case. The Earner product, shut down in November 2022, facilitated straightforward crypto lending, directing user deposits to third-party firms for earning yields. Notably, Block Earner lent to firms like Stablehouse, advised by Tether's former chief strategy officer Phil Potter, and XBTO Strategies Limited. In contrast, the Access product focused on deploying funds directly into DeFi platforms and was deemed not to meet the requirements for classification as a derivative or a managed investment scheme. Block Earner sees this legal case as providing...

Chamber of Digital Commerce Supports Hermès in MetaBirkins Case

The Chamber of Digital Commerce (CDC), a prominent blockchain and digital asset trade association, filed an amicus curiae brief in support of French design house Hermès in its legal battle against artist Mason Rothschild over the creation of "MetaBirkins" non-fungible tokens (NFTs). The outcome of this case could set a precedent for how trademarks are applied to digital assets in the Metaverse and beyond, impacting the entire digital economy. Hermès recently secured a victory when a federal jury ruled in its favor, finding Rothschild guilty of cybersquatting and brand dilution. Despite the verdict, Rothschild intends to continue fighting the decision, arguing that his work constitutes artistry akin to Andy Warhol's iconic Campbell's soup cans. The CDC's brief argues that Hermès' right to sell its digital goods should receive the same trademark protection as physical goods, emphasizing the established brand identity's importance in assigning value to MetaBirkins. The association...

JPMorgan Survey Reveals Institutional Confidence in AI for Trading, Decline in Interest in Cryptocurrency

In a recent survey conducted by JPMorgan, institutional investors expressed strong confidence in the role of artificial intelligence (AI) and machine learning (ML) in the future of trading. Of the 4,010 institutional traders surveyed across 65 countries, 61% identified AI and ML as the most impactful technologies for trading in the next three years. This marks a significant increase from two years ago when AI and ML accounted for only 25% in ranked importance. Conversely, interest in other technologies such as blockchain and mobile trading applications has declined since 2022, reflecting a shifting focus among institutional traders. While AI and ML offer various benefits, including trade predictions and real-time threat identification, institutions surveyed by JPMorgan have become less inclined to venture into cryptocurrency trading. According to the survey, 78% of institutional traders have no intentions to trade cryptocurrencies like Bitcoin within the next five years, compared to...

U.S. Treasury Raises Alarm on Cryptocurrency’s Role in Illicit Finance

The U.S. Treasury, through Under Secretary Brian Nelson, is set to address House lawmakers in an upcoming congressional hearing, voicing significant concerns over the exploitation of cryptocurrencies for illicit financial activities. This move shows a growing focus on combating money laundering and other illegal undertakings within the crypto space, with Washington lawmakers efforts to regulate digital assets. Nelson's testimony will appeal for enhanced legislative support to update the Treasury's capabilities and resources, aiming to effectively tackle contemporary challenges posed by the virtual asset sector. For over a decade, the Treasury has been leading efforts to curb terrorism financing, to balance mitigating risks associated with illicit finance while fostering responsible technological advancements. Despite possessing regulatory mechanisms like the authority to penalize non-compliant entities under the Bank Secrecy Act, the Treasury deems its current toolkit insufficient in...

Blockchain Association Opposes Senator Warren’s Digital Asset Regulation Bill

The Blockchain Association (BA) has voiced its opposition to Senator Elizabeth Warren’s proposed Digital Asset Anti-Money Laundering Act (DAAMLA) in a letter signed by eighty individuals, including former U.S. government and military officials. The letter, addressed to key lawmakers, warns that the bill could drive a significant portion of the digital asset industry overseas, posing national security risks and hindering law enforcement efforts. Signatories argue that Senator Warren’s legislation could stifle innovation and economic growth within the digital asset sector while having limited effectiveness in targeting foreign illicit actors. Notable figures within the digital asset industry, including Coinbase Chief Policy Officer Faryar Shirzad, have joined voices with individuals from various branches of the U.S. military, emphasizing the collective concern over the potential ramifications of the proposed bill. The opposition from the Blockchain Association shows a growing divide...

Crypto Finance (Deutschland) Receives BaFin Licenses

Crypto Finance (Deutschland), a subsidiary of Crypto Finance Group regulated by FINMA, has secured four licenses from BaFin, the German Federal Financial Supervisory Authority, enabling it to offer regulated digital asset trading, settlement, and custody services for institutional clients in Germany. This development coincides with Deutsche Börse's plans to launch DBDX, a digital exchange targeting institutional users, following its acquisition of a majority stake in Crypto Finance Group in 2021. The acquisition and licensing of Crypto Finance (Deutschland) align with Deutsche Börse's broader strategy to establish a trusted ecosystem for crypto assets, positioning the company within the regulatory framework outlined by MiCA. With BaFin's approval, Crypto Finance is poised to play a significant role in shaping the evolving landscape of institutional crypto trading and custody services in Germany and beyond. (Source: Cointelegraph)

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