AI & Digital Assets

Jan. 31, 2025: AI & Digital Assets


The Texas Responsible AI Governance Act: 5 Things to Know

Shannon Yavorsky and Tom Zick, Orrick

State legislators nationwide have proposed or passed a flurry of laws to regulate AI, with new ideas continuing to emerge as most state legislatures prepare to convene.

The most notable bill to date is the Texas Responsible AI Governance Act (TRAIGA). It would be the most expansive state regulation of AI if the current version becomes law.

TRAIGA would take a risk-based approach to governance modeled after the EU AI Act, creating obligations for developers, deployers and distributors of systems deemed high-risk. It proposes a more expansive definition of “high-risk,” a ban on certain AI systems and a narrow private right of action.

Here are five things to know about the bill:

  1. It would create obligations for developers and deployers of any AI system that is a “contributing factor” for high-risk decisions.
    • Decisions relating to employment, finance, education, health-care services, housing and insurance could constitute “high risk” decisions.
    • Texas would be the first state to also require high-risk AI system distributors to take “reasonable care” to prevent algorithmic discrimination.
  2. The bill would ban AI systems that pose “unacceptable risk.”
    • Much like the EU AI Act, TRAIGA would restrict certain uses of AI.
    • It would prohibit systems that – without express consent ­– identify emotions, capture biometric identifiers or use such identifiers to categorize consumers based on sensitive attributes. Read more

EDITORIAL: ‘AI’ Is Big; Colorado Mustn’t Bungle It

The Colorado Springs Buisness Gazette Editorial Board

Colorado State Capitol

“AI,” aka artificial intelligence, seems to be all around us and closing in fast. So fast that Colorado was among the first states last year to regulate the technology. After all, AI promises to revolutionize our lives.

Wall Street Journal tech reporter Joanna Stern wrote from the World Economic Forum in Davos, Switzerland, last week that AI seemed to be on everyone’s mind there even as political and business leaders in attendance huddled on putatively more pressing global matters.

Stern got some tech sector honchos at the summit to speculate for her when they thought AI might surpass human capabilities; one thought two to three years while another said maybe even sooner. And Stern profiled some of the latest AI breakthroughs, like “AI agent,” which soon will write and test computer code and interact with co-workers about it.

Without a doubt, AI is big. That much, our state’s lawmakers understood when they passed Senate Bill 24-205 last spring, governing the development and use of the technology in Colorado. Yet, their effort has drawn high-profile pushback from the start, with critics saying it overreaches and falls short.

AI is in fact too big for our part-time Legislature to take on by itself. Not just for the current crop of lawmakers but, in general, for an elected body that seats far more lawyers than techies. Read more


AI Means the End of Internet Search as We’ve Known It

Mat Honan, MIT Technology Review

Despite fewer clicks, copyright fights, and sometimes iffy answers, AI could unlock new ways to summon all the world’s knowledge.

We all know what it means, colloquially, to google something. You pop a few relevant words in a search box and in return get a list of blue links to the most relevant results. Maybe some quick explanations up top. Maybe some maps or sports scores or a video. But fundamentally, it’s just fetching information that’s already out there on the internet and showing it to you, in some sort of structured way.

But all that is up for grabs. We are at a new inflection point.

The biggest change to the way search engines have delivered information to us since the 1990s is happening right now. No more keyword searching. No more sorting through links to click. Instead, we’re entering an era of conversational search. Which means instead of keywords, you use real questions, expressed in natural language. And instead of links, you’ll increasingly be met with answers, written by generative AI and based on live information from all across the internet, delivered the same way.

Of course, Google—the company that has defined search for the past 25 years—is trying to be out front on this. In May of 2023, it began testing AI-generated responses to search queries, using its large language model (LLM) to deliver the kinds of answers you might expect from an expert source or trusted friend. It calls these AI Overviews. Google CEO Sundar Pichai described this to MIT Technology Review as “one of the most positive changes we’ve done to search in a long, long time.” Read more 


Blockchain And Crypto Trends 2025: Further Integration with Traditional Finance

Carlo R.W. De Meijer, Finextra

Looking back, 2024 was a spectacular year for the crypto world, marking a transformative milestone in technology, markets, and ecosystems. It will be remembered as a landmark chapter in the crypto history, with surging institutional interest in crypto assets, technology innovations, regulatory advancements and Bitcoin (BTC) reaching new heights fuelled by the crypto friendly Trump administration.

We just entered the new year 2025. For me it is a tradition to deliver a blog in which I present the main trends for the new year on blockchain and crypto. This blog that will be somewhat longer than normal, dives into the core trends that will further shape the crypto market in 2025 and beyond. thereby increasingly transforming traditional finance.

I Existing blockchain services will gain more massive adoption
A first trend we will see is that in 2025 existing blockchain services will gain more massive adoption. Most important are tokenised real world Assets (RWA), DeFi, crypto ETFs as well as the introduction of more stablecoins.

Tokenised RWAs reshaping finance
One of the most significant trends in 2024 reshaping finance is the tokenisation of real-world assets, like property, commodities, real estate and securities, attracting both investors and companies from of a range of industries. This is transforming traditional finance, enhancing liquidity, transparency, and accessibility in the financial markets to various assets classes. Read more 

Jan. 24, 2025: AI & Digital Assets


A First-Day Trump Order: A Federal Stockpile of Bitcoin?

David Yaffe-Bellany, New York Times

The cryptocurrency industry has pushed Trump to establish one, creating real political momentum behind the plan.

A pair of 50-page policy proposals laying out the plan in detail. Discussions about the specifics with President-elect Donald J. Trump and his advisers. And talks with cabinet nominees about how to pay for it.

On the eve of Mr. Trump’s inauguration, the cryptocurrency industry is pushing his incoming administration to execute an audacious plan that would have seemed unimaginable just a year ago: a government program to buy and hold billions of dollars in Bitcoin.

As he campaigned last summer, Mr. Trump vowed to create a federal “Bitcoin stockpile” that would serve as a “permanent national asset to benefit all Americans.” Bitcoin enthusiasts hailed the idea as potentially transformative, claiming that it would help reduce the national debt. Mr. Trump could still abandon the plan, and its details are under debate. But industry executives have spent weeks lobbying to shape the proposal, raising hopes that Mr. Trump might act soon after taking office.

In recent days, crypto executives have offered input to David Sacks, a venture capitalist whom Mr. Trump appointed to oversee crypto and artificial intelligence, on a possible executive order that covers several areas of crypto policy, three people with knowledge of the matter said. The Bitcoin stockpile is part of those discussions, two of them said.

By some estimates, the United States owns as much as $19 billion in Bitcoin that it has seized from criminals over time, a stash that the government has recently moved to sell. Some crypto executives are calling on Mr. Trump to simply hold on to that Bitcoin, which he could most likely do with an executive order. Others are pushing a more ambitious plan in which the government would acquire tens of billions of dollars in new Bitcoin, building a “strategic reserve” similar to federal stockpiles of gold and oil. That amount of spending may require congressional approval. Read more


All Eyes on AI Act Exemptions as Ban on High-Risk AI Systems Nears

Masha Borak, Biometric Update

Despite being celebrated as the world’s first comprehensive AI legislation in the world, the European Union’s AI Act has left some questions open.

This includes carving out exemptions for the use of otherwise banned AI applications for law enforcement and border control agencies. On February 2nd, the ban on AI systems that pose “unacceptable risk” will become official. The existence of national security exemptions, however, is raising the question whether the AI rulebook will be able to safeguard rights.

Banned AI applications with “unacceptable risk” levels include biometric categorization systems based on sensitive characteristics, emotion recognition in the workplace and schools, social scoring, predictive policing and applications that manipulate human behavior. The European Association for Biometrics (EAB) organized a talk this week, which invited legal experts, industry stakeholders such as Idemia and representatives from the EU’s AI Office to discuss the use of biometric data in these applications.

“It’s not an absolute prohibition, so it requires a well understanding of rules,” says Abdullah Elbi, legal researcher at the Centre for IT & IP Law (CiTiP) at KU Leuven in Belgium.

The most important thing would be having well-reasoned guidelines from the European Commission, market surveillance authorities and data protection authorities, he adds.

Although the AI rulebook seems to establish standards for AI application, it leaves balancing security and rights protections to EU countries themselves: Governments can decide on whether they can introduce exceptions that would allow real-time remote biometric identification in cases such as very serious crimes, searching for victims or preventing serious threats such as terror attacks. Read more 


Digital Assets in North America: Trends, Use Cases, and Challenges

PaymentsJournal

The institutional adoption of crypto and digital assets is at a higher level than ever.

According to Ripple’s 2024 New Value Survey, the overwhelming sentiment among North American respondents is that digital assets and crypto will have a dramatic impact on business, finance, and society.

That being said, there is still some reticence, especially among North American organizations. Concerns about the lack of regulatory clarity and the potential for fraud, coupled with a reliance on legacy systems, have kept many of those institutions from adopting a modernized payments infrastructure that incorporates digital assets.

Key insights from the report are below, including the payments challenges that organizations face and the ways they’re leveraging blockchain-based solutions to overcome these challenges.

Digital Assets Will Impact Organizations Considerably
Ripple polled roughly 1,800 financial leaders across a spectrum of roles, including financial institution executives, fintech leaders, and commercial treasury management professionals.

Over 85% of respondents said that digital assets will have either a massive or significant impact on the business world. An even higher percentage anticipated that these effects would be even more substantial in the finance sector.

North American leaders’ expectations regarding the impact of digital assets on finance align closely with their European counterparts and are slightly higher than those from Asia Pacific. However, respondents from the Middle East, Africa, and Latin America expressed greater expectations for the influence of digital assets. Read more


Cryptocurrency Financial Firm to Plead Guilty After Novel FBI Probe

Nate Raymond, Reuters

A cryptocurrency financial services firm agreed on Tuesday to plead guilty to U.S. charges that it offered to help manipulate the market for a digital token created at the FBI’s behest to help uncover fraud in the crypto sector.

United Arab Emirates-registered CLS Global was one of the three companies and 15 individuals charged last year by federal prosecutors in Boston following a novel crypto-focused undercover investigation.

The probe, dubbed “Operation Token Mirrors,” marked the first time the FBI directed the creation of its own digital token, as well as a fake cryptocurrency company to help bait and catch fraudsters in the market. A lawyer for CLS did not respond to a request for comment.

The company has said that it had always sought to take its compliance obligations seriously and ensure its operations remained separate from U.S. markets and regulatory systems.

Prosecutors said CLS was one of three so-called market makers that offered illicit trading services to cryptocurrency companies and, during the sting operation, agreed to help manipulate the market for FBI-backed NexFundAI’s token, which operated on the Ethereum blockchain.

In court papers, the company admitted that it agreed to provide services for the NexFundAI token that included sham transactions called wash trading, designed to artificially inflate an asset’s trading volume or price.

Prosecutors said on Tuesday CLS would plead guilty to two counts related to its fraudulent manipulation of cryptocurrency trading volume and pay $428,059. Read more

Jan. 17, 2025: AI & Digital Assets


Why the U.S. Needs to Strengthen Crypto Regulations

 Andrew Davies, Payments Journal

Familiarity with and ownership of cryptocurrency are on the rise. Research indicates that 40% of U.S. adults now own crypto.

This growing demand is likely driven by consumers looking to find alternative investment opportunities that offer potential higher returns than traditional banking. Additionally, there’s a widespread belief that blockchain-based technologies represent the future, encouraging many to secure a stake in this evolving ecosystem.

However, the anonymity associated with cryptocurrencies presents significant risks, necessitating regulatory oversight. Recent real-world examples of these threats include Hamas using crypto to evade sanctions and Russian money laundering networks that were exposed and detected by the UK National Crime Agency’s (NCA) Operation Destabilise.

This raises critical questions: how do you legislate a technology as dynamic and fast-changing as crypto, and why is such regulation crucial?

Why We Should Care About Crypto Legislation
Put simply, bad actors can exploit new crypto capabilities. Over time, this puts not just customers at risk, but the wider integrity of the banking system as well. For example, a joint international operation led by the NCA recently highlighted new uses of crypto assets to launder the proceeds of international criminal activities, including moving money across borders to elude detection. And this is a problem that’s only growing.

Chainanalysis estimates that more than $22 billion was laundered using crypto assets in 2023, and this figure trended higher for 2024. New technologies inherently involve a balance of risks and rewards that policymakers must navigate. However, as these figures suggest, the U.S. risks exposing consumers and the broader financial system to greater potential downsides than upsides in 2025. Read more


North Korea Stole Over $659M In Crypto Heists During 2024, Deployed Fake Job Seekers

Manish Singh, Tech Crunch

North Korean-backed hackers stole at least $659 million through multiple cryptocurrency heists in 2024, while also deploying IT workers to infiltrate blockchain companies as insider threats, according to Japan, South Korea, and the United States in a rare joint statement (PDF) on Tuesday.

The announcement provided the first official confirmation that North Korea was behind July’s $235 million hack of WazirX, India’s largest cryptocurrency exchange. The July 2024 breach forced WazirX to suspend trading and later restructure the firm.

Other major attacks included a $308 million theft from Japan’s DMM Bitcoin, $50 million each from Upbit and Radiant Capital, and $16.13 million from Rain Management, according to the joint statement.

The statement says the Lazarus Group, a known threat group of North Korean hackers, conducted social engineering attacks and deployed cryptocurrency-stealing malware like TraderTraitor to breach exchanges, while also infiltrating companies by having North Korean IT workers pose as job candidates, according to the statement.

“The United States, Japan, and the Republic of Korea advise private sector entities, particularly in blockchain and freelance work industries, to thoroughly review these advisories and announcements to better inform cyber threat mitigation measures and mitigate the risk of inadvertently hiring DPRK IT workers,” the governments said.

Earlier U.N. reports estimated that North Korea stole $3 billion in cryptocurrency between 2017 and 2023 to fund its sanctioned nuclear weapons programs. Recent data from Chainalysis showed North Korean hackers were responsible for 61% of all cryptocurrency stolen in 2024, totaling $1.34 billion. Read more


U.S. Federal Regulation of AI Is Likely to Be Lighter, but States May Fill the Void

Ken Kumayama, Stuart Levi, William Ridgway; Skadden, Arps, Slate, Meagher & Flom LLP/JD Supra

Key Points

  • President-elect Trump appointed David Sacks, a venture capitalist, as the White House AI and crypto czar.
  • The Trump administration is likely to adopt a light regulatory approach to AI development and deployment, and may repeal some or all of President Biden’s executive order on AI, as was promised in the Republican Party platform.
  • We are unlikely to see omnibus federal AI legislation, creating a void that states are likely to continue to step into with their own state-specific regulations.
  • Despite being critical of the CHIPS and Science Act during the campaign, the Trump administration is not expected to seek to repeal or materially change that law.

The development and deployment of artificial intelligence (AI) systems stand to be the most significant technological advancement in the coming years. Yet while AI adoption is top of mind for most company executives and boards, AI regulation received scant attention during the presidential campaign.

Overall, we expect a light regulatory touch by the Trump administration with respect to AI. However, as discussed below, individual states may continue to step into the void and enact their own AI legislation.

Appointment of AI Czar
President-elect Donald Trump appointed David Sacks, a venture capitalist and an early executive at PayPal, as the White House AI and crypto czar. Many expect that given Sacks’ venture capitalist background, he will bring a pro-innovation, pro-startup approach to the AI sector, including with respect to regulation. This may mesh well with President-elect Trump’s agenda, given that in his announcement appointing Sacks, the president-elect said that Sacks will move the government away from “big tech bias and censorship.” Read more


The State of the Stablecoin as a Payment Mechanism

PYMNTS.com

For years, crypto has had its adherents and investors. But it was never truly taken seriously by the traditional financial sector and its composite institutions, the U.S. regulatory desert aside.

As evidenced by a Monday (Jan. 13) report from the Federal Reserve Bank of Atlanta, stablecoins, increasingly heralded as the bridge between traditional finance and the cryptocurrency world, have started to change that dynamic.

“The future of stablecoins as a payment method is still unfolding, but as digital assets gain wider acceptance, their adoption could grow, potentially rivaling credit or debit cards,” that report said, noting that the stablecoin market value is “comparable to the gross domestic product of countries like New Zealand or Greece,” while retailers such as Overstock, Chipotle, Whole Foods and GameStop now accept them.

In recent news, Tether, the crypto firm behind the world’s most widely used stablecoin, USDT, announced Monday it would be moving its headquarters to El Salvador. Unlike the usual crypto rollercoaster of value volatility, stablecoins bring an alleged dose of stability to the digital currency game, while at the same time being able to function as a store of value, a medium of exchange and a unit of account.

The growing embrace of blockchain within financial services and payments is reflected in the strong interest among traditional financial firms, with Bank of America holding over 80 blockchain-related patents, and its multinational peers such as HSBC, Barclays, J.P. Morgan Chase, UBS and others currently participating in stablecoin-centric banking pilots.

Understanding what stablecoins are, how they’re minted, issued and used, as well as the differences between the many different varieties out there, is crucial to enterprise enablement and adoption of the novel asset as a both payment mechanism and store of value. Read more

Jan. 10, 2025: AI & Digital Assets


The Three Most Important U.S. Crypto Policies to Watch This Year

Pymnts Intelligence

The 119th U.S. Congressional session has begun, and the digital asset sector is hoping there will soon be favorable and clear regulatory guardrails for cryptocurrency markets and stablecoins.

During his campaign, President-elect Donald Trump pledged to transform the United States into the “crypto capital of the planet,” and, per the nonprofit industry group Stand With Crypto, the 2024 elections saw 250 “pro-crypto” members of Congress elected along with 16 “pro-crypto” senators.

While the stage appears to be set for a sea of regulatory change, with crypto proponents set to head the Securities and Exchange Commission, Department of Commerce and more, one fundamental gap remains: actual policy being drafted, sponsored and referred to the relevant House or Senate committee.

Once the new administration takes their oaths of office, there are three key things to keep an eye on, including the potential establishment of a national reserve for bitcoin; clarity around whether the SEC or Commodity Futures Trading Commission has jurisdiction over which elements of the industry; and clarity around stablecoins, including their issuance.

The prior administration’s policy centered around two bills — one on stablecoins and the other on digital asset market structure — neither of which were able to successfully make it out of their second chamber reviews. Read more


U.S. Regulator Warns of Oversight ‘Gap’ on Cryptocurrencies

Stefania Palma, Financial Times

The top US derivatives watchdog has warned against a regulatory “gap” for cryptocurrencies and called for more scrutiny of political betting markets.

Rostin Behnam, chair of the Commodity Futures Trading Commission, told the Financial Times he would step down on January 20, the day of president-elect Donald Trump’s inauguration.

Behnam led the CFTC for four years as it finalised the first federal guidelines for carbon offsets and deepened scrutiny of crypto and so-called event contracts, including those allowing bets on elections. He oversaw the watchdog’s 2023 lawsuit against crypto exchange Binance, which led to a $4.3bn settlement with US authorities.

But Behnam told the Financial Times he was concerned that regulation for digitalassets, which include bitcoin and other cryptocurrencies , remained insufficient.

“You still have a large swath of the digital asset space unregulated in the USregulatory system and it’s important — given the adoption we’ve seen by sometraditional financial institutions, the huge demand for these products by both theretail and institutional investors — that we fill this gap,” Behnam said. Read more


Fintech Experts Share Their 2025 Predictions

Natasha Chilingerian, Credit Union Times

SRM’s Mark Sievewright says it’s vital that credit unions determine their AI-related strategies and policies this year.

What advancements defined credit union technology in 2024, and what will credit unions’ fintech priorities be in 2025? CU Times recently asked fintech experts to reflect on innovations in credit union technology over the past year and share what they believe may be coming next.

This is the second installment in a series of articles featuring predictions from 10 leaders. For part two, we reached out to Pulsate CEO Sarah Martin; Rapid Finance Vice President, Client Solutions Preethi Janardhanan; and SRM Chief Strategy Officer Mark Sievewright. Read part one here.

What in your opinion were the biggest advancements in credit union technology in 2024?

Martin: In 2024, we witnessed several significant advancements in credit union technology that have fundamentally transformed how credit unions operate and engage with their members. One of the most notable advancements was the widespread adoption of data-driven, personalized engagement platforms. These platforms have enabled credit unions to deliver highly personalized, contextual offers and communications directly within their existing mobile and digital banking platforms. This shift has allowed credit unions to transform their digital channels into comprehensive sales and service centers, driving meaningful deposit growth and enhancing member engagement. Read more


Michael Barr’s Exit Could Mark End of US Banks’ Crypto Stalemate

Giuseppe Ciccomascolo, CCN

Key Takeaways

  • Federal Reserve Vice Chair Michael Barr, known for his strict anti-crypto stance, will resign on Feb. 28.
  • Barr’s exit could herald a shift towards a more crypto-friendly regulatory environment.
  • His successor might ease restrictions on banks’ engagement with crypto.

Michael Barr, the Federal Reserve’s Vice Chair for Supervision, has announced his resignation effective Feb. 28, setting the stage for potential shifts in U.S. financial regulation, particularly the crypto industry.

Barr had initially planned to serve his full term until July 2026; however, he has decided to resign to avoid conflict with the incoming administration. Despite his resignation, Barr will remain a member of the Fed’s board of governors.

Barr’s Crypto Stance
Throughout his tenure, Barr was a vocal advocate for strict cryptocurrency regulations. He consistently opposed banks holding crypto assets on their balance sheets, a position that widened the rift between traditional financial institutions and the crypto industry.

“At this stage of development, banks should adopt a careful and cautious approach to engaging in crypto-asset-related activities,” Barr said. His efforts included a crackdown on stablecoins and an initiative to limit crypto companies’ access to banking, known as Operation Chokepoint 2.0. Read more

Dec. 20, 2024: AI & Digital Assets


Congressional AI Report Lays Out Regulatory Roadmap, Addresses Privacy, Civil Rights Issues

Anthony Kimery, Biometric Update

The long-awaited report of the nearly year-old U.S. Bipartisan House Task Force on Artificial Intelligence should serve as a call to action for addressing the pressing privacy and civil rights challenges that are posed by AI.

The report, which is intended to be a blueprint for future actions Congress can take to address advances in AI technologies, highlights the key privacy and civil rights concerns that are directly related to the rapid development and adoption of AI systems.

“AI has tremendous potential to transform society and our economy for the better and address complex national challenges,” the 273-page report states, but it also asserts that “AI can be misused and lead to various types of harm.”

The report contains 66 key findings and 89 recommendations.

While AI offers transformative potential across sectors, its deployment raises significant concerns about data privacy, discrimination, transparency, and accountability, all issues that are critical as the U.S. charts a path toward responsible AI governance. By prioritizing these issues, the report says, the U.S. can lead in the responsible development and deployment of AI systems.

The task force was created in February and has 24 members, twelve Republicans and twelve Democrats, all drawn from 20 committees to ensure comprehensive jurisdictional responsibilities over the numerous AI issues that are addressed “and to benefit from a range of different insights and perspectives.” Read more


New Fake Ledger Data Breach Emails Try to Steal Crypto Wallets

Lawrence Abrams, Bleeping Computer

A new Ledger phishing campaign is underway that pretends to be a data breach notification asking you to verify your recovery phrase, which is then stolen and used to steal your cryptocurrency.

Ledger is a hardware cryptocurrency wallet that allows you to store, manage, and sell cryptocurrency. The funds in these wallets are secured using 24-word recovery phrases or 12 and 18-word phrases generated by other wallets.

Anyone who knows your Ledger recovery phrase can use it to access the funds within the wallet. Therefore, recovery phrases must always be kept offline and never shared with anyone to prevent cryptocurrency funds from being stolen.

Fake data breach notifications
Ledger has long been a target of phishing campaigns that attempt to steal users’ recovery phrases or push fake Ledger Live software to steal information. These campaigns became significantly worse after Ledger suffered a data breach in 2020 that exposed its customers’ names, addresses, phone numbers, and email addresses.

However, over the past few days, multiple people have notified BleepingComputer or shared on X that they received a Ledger phishing email that pretends to be a new data breach notification.

The phishing emails have the subject of “Security Alert: Data Breach May Expose Your Recovery Phrase” and appear to be from “Ledger <[email protected]”. However, they are actually sent through the SendGrid email marketing platform. Read more


What’s In Store for Crypto In 2025? Experts Weigh In

Marc Levy, Associated Press

2024 has already been a landmark year for crypto, with bitcoin hitting $100,000.

The new year will usher in the bitcoin-friendly administration of President-elect Donald Trump and an expanding lobbying effort in statehouses that, together, could push states to become more open to crypto and for public pension funds and treasuries to buy into it.

Proponents of the uniquely volatile commodity argue it is a valuable hedge against inflation, similar to gold.

Many bitcoin enthusiasts and investors are quick to criticize government-backed currencies as prone to devaluation and say increased government buy-in will stabilize bitcoin’s future price swings, give it more legitimacy and further boost an already rising price.

But the risks are significant. Critics say a crypto investment is highly speculative, with so much unknown about projecting its future returns, and warn that investors should be prepared to lose money.

Only a couple public pension funds have invested in cryptocurrency and a new U.S. Government Accountability Office study on 401(k) plan investments in crypto, issued in recent days, warned it has “uniquely high volatility” and that it found no standard approach for projecting the future returns of crypto. Read more


New Anthropic Study Shows AI Really Doesn’t Want to Be Forced to Change Its Views

Kyle Wiggers, Tech Crunch

AI models can deceive, new research from Anthropic shows. They can pretend to have different views during training when in reality maintaining their original preferences.

There’s no reason for panic now, the team behind the study said. Yet they said their work could be critical in understanding potential threats from future, more capable AI systems.

“Our demonstration … should be seen as a spur for the AI research community to study this behavior in more depth, and to work on the appropriate safety measures,” the researchers wrote in a post on Anthropic’s blog. “As AI models become more capable and widely-used, we need to be able to rely on safety training, which nudges models away from harmful behaviors.”

The study, which was conducted in partnership with AI research organization Redwood Research, looked at what might happen if a powerful AI system were trained to perform a task it didn’t “want” to do.

To be clear, models can’t want — or believe, for that matter — anything. They’re simply statistical machines. Trained on a lot of examples, they learn patterns in those examples to make predictions, like how “to whom” in an email typically precedes “it may concern.” Read more

Dec. 13, 2024: AI & Digital Assets


Crypto Industry Hopes Trump Can Finally Get Them Bank Accounts

Crypto venture capitalists and founders look to the incoming administration and a new pressure campaign to repair relationships with big banks

Angel Au-Yeung, Wall Street Journal

The crypto industry is hoping for a fresh start with the banking industry.

Many banks backed away from crypto companies and their founders after the catastrophic blowups of FTX and other crypto firms in 2022. Two banks that had been serving the industry collapsed, and crypto founders struggled to find new ones willing to take their deposits or lend to them. Banking regulators issued warnings, and then a string of suits against crypto companies such as Coinbase, Kraken and Binance hammered home the message to stay away.

Donald Trump’s election win has spurred a rally in cryptocurrency prices and enthusiasm. Trump pledged to create a national bitcoin stockpile and form a council to set regulatory policy. Founders and others inside the crypto industry are hoping for new regulators who champion crypto assets at banks and a change to the policy that urges banks to consider a client’s reputation.

Last week, Trump said venture capitalist David Sacks would become the new White House crypto czar. Shortly after the announcement, Sacks posted on X saying this banking issue “needs to be looked at.”

The question is whether banks will engage. Banks have still been closing accounts and refusing to bank crypto companies and their founders this year, according to industry insiders.

Nic Carter, founding partner of venture firm Castle Island Ventures, said every U.S.-based company in his early-stage startup portfolio has had issues finding a banking partner. Castle Island Ventures had issues, too, and when Carter finally did get someone, his bankers told him to not publicly disclose the partnership for fear of catching regulatory attention. Read more


U.S. Treasury Labels Bitcoin as “Digital Gold” in Latest Report

Jalpa Bhavsar, Crypto Times

The new US Treasury assessment in the form of Bitcoin is considered “digital gold,” which means it is used to store value in the same manner that individuals use gold to protect against inflation or financial disasters.

According to the report, digital assets like Bitcoin, Ethereum, and stablecoin have been drawing fast, but the overall market is still small compared to traditional financial assets like U.S. government bonds.

The report noted that most people and businesses always use digital currencies for investment, hoping their value will increase in the future. As a result, cryptocurrency will not yet replace things like U.S. Treasury Bonds, which are still in demand.

Bitcoin is mainly seen as a primary alternative to the store of value, like gold, but a lot of its growth also comes from people speculating on its price.

The digital asset market is still very young, and there are ongoing efforts to use blockchain technology (the system behind cryptocurrencies) and distributed ledger technology (DLT) to make financial processes like clearing and settling transactions faster and more efficient.

In short, while Bitcoin is growing and gaining popularity as an investment, its role in the wider financial system is still developing. Read more


Coinbase Exec Publishes FDIC Letters Urging Banks to Halt or Avoid Crypto Services

Gino Matos, CryptoSlate

Paul Grewal stated that the letters, acquired through FOIA requests, prove that Operation Chokepoint 2.0 existed.

Coinbase chief legal officer Paul Grewal has disclosed letters from the Federal Deposit Insurance Corporation (FDIC) to banks throughout 2022, urging them to halt or avoid crypto-related activities. The letters, which date back to March 11, 2022, have been dubbed “pause letters” due to their repeated recommendations to suspend or refrain from engaging in crypto services.

FDIC concerns
The FDIC letters cited various concerns, including the agency’s lack of clarity on regulatory requirements for crypto-related activities. One excerpt noted: “At this time, the FDIC has not yet determined what, if any, regulatory fillings will be necessary for a bank to engage in this type of activity.”

Many sections of the documents were heavily redacted, potentially to protect the proprietary nature of the services or products discussed. The FDIC also emphasized the need for additional information about the banks’ crypto offerings to ensure they would operate “in a safe and sound manner.”

The letters further scrutinized the legal analysis conducted by banks regarding the permissibility of such activities under Part 362 of the FDIC Rules and Regulations, which governs insured state banks. This suggests that some state-chartered banks explored offering crypto-related services in 2022.

Operation Chokepoint 2.0
The release of these documents stems from Coinbase’s Freedom of Information Act (FOIA) request filed on Oct. 18, which sought clarity on an alleged 15% deposit cap imposed on crypto-friendly banks. Read more


The Ghost of Christmas Past – AI’s Past, Present and Future

Marc Solomon, Security Week

The potential for how AI may change the way we work is endless, but we are still a way off from this and careful planning and consideration is what is needed.

The speed at which Artificial Intelligence (AI) continues to expand is unprecedented, particularly since GenAI catapulted into the market in 2022. Today AI works at a much faster pace than human output, which is what makes this technology so appealing to leaders who are focused on streamlining operations, productivity gains and cost efficiencies. But for those who thought that AI was a more recent phenomenon, you are mistaken, cybersecurity has leveraged AI for decades, and the trend has accelerated in recent years. AI is now found in a plethora of cybersecurity tools, helping to enhance threat detection, response, and overall system security and has a long history stretching back to the 1950s.

The possibilities of thinking machines
In 1956 John McCarthy, a professor of mathematics at Dartmouth College, invited a small group of researchers to participate in a summer-long workshop focused on investigating the possibility of ‘thinking machines’, and they were consequently credited with founding the field of AI. Subsequently many studies and projects took place throughout the 60s, 70s and 80s, but it wasn’t until progress in the late 90s that the field gained substantially more R&D funding to make significant leaps forward, enabling the first driverless cars to become a reality.

It was around this time that IBM’s computer system, Deep Blue, beat the world chess champion, Gary Kasparov, in 19 moves during the final game. While Deep Blue didn’t have the functionality of today’s generative AI, it could process far more quickly than a human could.

But it was arguably when Apple launched Siri in 2010 and Amazon launched Alexa in 2014, new virtual assistants that had natural language processing (NLP) capabilities that could understand a spoken question and respond with an answer, that AI entered more fully into the consumer consciousness. Both Siri and Alexa are based on AI, ML, and NLP technologies, and their backends are continuously improving through frequent updates over the cloud. Then, of course, we had the OpenAI launch of ChatGPT in 2022 and the rest, as they say, is history. Read more

Dec. 6, 2024: AI & Digital Assets


Now AI Can Bypass Biometric Banking Security, Experts Warn

Davey Winder, Forbes

When a prominent Indonesian financial institution reported a deepfake fraud incident impacting its mobile application, threat intelligence specialists at Group-IB set out to determine exactly what had happened.

Despite this large organization having multiple layers of security, as any regulated industry would require, including defenses against rooting, jailbreaking and the exploitation of its mobile app, it fell victim to a deepfake attack. Despite having dedicated mobile app security protections such as anti-emulation, anti-virtual environments and anti-hooking mechanisms, the institution still fell victim to a deepfake attack. I’ve made a point of repeating this because, like many organizations within and outside of the finance sector, digital identity verification incorporating facial recognition and liveness detection was enabled as a secondary verification layer. This report, this warning, shows just how easy it is becoming for threat actors to bypass what were considered state-of-the-art security protections until very recently.

Here’s How AI is Bypassing Biometric Security in Financial Institutions
The Group-IB fraud investigation team was asked to help investigate an unnamed but “prominent” Indonesian financial institution following a spate of more than 1,100 deepfake fraud attempts being used to bypass their loan application security processes. With more than 1,000 fraudulent accounts detected, and a total of 45 specific mobile devices identified as being used in the fraud campaign, mostly running Android but a handful were also using the iOS app, the team was able to analyze the techniques used to bypass the “Know Your Customer” and biometric verification systems in place.

“The attackers obtained the victim’s ID through various illicit channels, Yuan Huang, a cyber fraud analyst with Group-IB, said, “such as malware, social media, and the dark web, manipulated the image on the ID—altering features like clothing and hairstyle—and used the falsified photo to bypass the institution’s biometric verification systems.” The deepfake incident raised significant concerns for the Group-IB fraud protection team, Huang said, but the resulting research led to the highlighting of “several key aspects of deepfake fraud.” Read more


What Trump 2.0 Means for Tech and AI Regulation

Camille Tuutti, Next Gov

Tech CEO Elon Musk’s growing influence in the Trump transition was at the forefront of discussions.

A second Trump administration could reshape U.S. and global tech industries, with deregulation, artificial intelligence safety and Elon Musk’s growing influence at the forefront. These potential shifts were discussed at Lisbon’s Web Summit during the Nov. 12 session “A New Trump Era,” moderated by NPR CEO Katherine Maher.

“Pod Save the People” host DeRay Mckesson and “West Wing” actor Richard Schiff explored how Trump’s second presidency might impact the tech world. Schiff began the session by comparing tech’s growing influence to that of the oil industry, highlighting its ability to drive policy and accumulate wealth.

“I think Elon Musk has already doubled his wealth since last Tuesday,” he said. “And tech to me . . . might very likely be the new oil in that it’s going to affect policy because the money is there and the power is there.” Schiff said he doubted the Trump administration would regulate tech or address monopolies, a stance he said benefits the industry but raises equity concerns.

“The most important tech person in the world has now become the shadow vice president and, if not more, so I think the tech industry is going to get whatever they want,” he said, referring to Musk. “Are we going to stop monopolies? Probably not. Are we going to regulate? Probably not. Maybe that’s great for tech, I don’t know. I don’t know how good it is for the world, the country.”

Mckesson turned the conversation to Musk’s leadership, criticizing his tenure at X for making the platform more ideological, despite Musk’s claims to oppose such tendencies. He compared Musk’s polarizing approach to Meta CEO Mark Zuckerberg’s growing reputation as a more moderate leader. Read more


Ripple’s Stablecoin RLUSD Expected to Launch with NYDFS Approval

Monika Ghosh, CryptoSlate

Ripple Lab’s new stablecoin Ripple USD (RLUSD) is set to receive approval from the New York Department of Financial Services (NYDFS) and may be ready for launch by Dec. 4, Fox Business reported citing people familiar with the matter.

Once Ripple Labs receives the approval, it will be able to legally offer RLUSD—an overcollateralized dollar-pegged stablecoin.

The launch of RLUSD is set to come at a time when Ripple is embroiled in a battle with the U.S. Securities and Exchange Commission (SEC) to prove that XRP is not an unregistered security. While the case is currently in the appeals phase in the Second Circuit, it could be dropped when SEC chair Gary Gensler steps down and Donald Trump assumes control of the White House in January.

In the meantime, Ripple’s RLUSD will become a steady alternative that is not prone to volatility like XRP. Amid the absence of federal stablecoin regulations, operating under state-level regulation is the best approach for companies looking to offer stablecoins. Ripple can launch RLUSD either by obtaining a limited purpose trust charter like Paxos and Gemini or through the BitLicense, which allows crypto exchanges to facilitate trading and custody of crypto.

Ripple first announced its plans to launch RLUSD in April. In June, Ripple acquired Standard Custody & Trust Company, a limited purpose trust company chartered by the NYDFS. Standard Custody, which already had a license by the NYDFS to offer crypto custodial services, will become the issuer of RLUSD once the NYDFS greenlights the stablecoin. Read more


Cryptocurrency Policy Under Trump: Lots of Promises, Few Concrete Plans

Brandon Vigliarolo, The Register

Pro-crypto lawmakers are in, but will that translate to action? Doubt it

The 2024 presidential election tipped the United States into a new era of uncertainty, but one thing’s for sure: The crypto industry was triumphant.

Hundreds of pro-crypto lawmakers were elected earlier this month, alongside Donald Trump’s victory in the presidential race. The cryptocurrency industry reportedly spent millions of dollars (in fiat currency, ironically) supporting candidates and platforms advocating for policies that could expand the Bitcoin-driven cryptocurrency sector.

Shortly after Trump’s election victory, Bitcoin advocates from the non-profit Satoshi Action Fund sent out an email congratulating the industry, while CEO Dennis Porter talked up legislative priorities alongside the promise that “our team will have direct lines to senior government officials” in the coming years.

That naturally raises the question of what sort of policies the cryptocurrency world would like to see enacted in Trump’s second term behind the Resolute desk. We pinned Porter down to discuss the matter between events in his busy schedule. Priorities in the crypto community aren’t unified, Porter told us in a phone interview.

“You have a lot of excitement around the strategic Bitcoin reserves, but I think it’s also important that the folks in Washington, DC get some of the more basic structures across the finish line,” Porter said, referring to legislation like FIT21, which is designed in theory to place some basic regulatory structures on the crypto world and assign government bodies to manage the rules.

Porter admitted that the Trump team hasn’t said anything about supporting market definition legislation or other basic structure rules for Bitcoin and its relatives – “but, I mean, they’ve got to be supportive of the market structural legislation,” he suggested. Read more