Degen Lawyer's Newsletter - China reigns in AI Development, Global Crypto Regulation and More!

GM. Welcome to Degen Lawyer's Newsletter, where we bring you your weekly dose of legal insights, and regulatory updates in the emerging tech and law space. Our expert lawyers serve up curated analysis, hot takes, and expert commentary, sprinkled with a healthy dose of the wacky and meme-worthy content. Enjoy!

In this week’s edition:

1. News in short

2. Article of the week - Global Crypto Regulation finally here?

3. Crazy Crypto News - Bitcoin ETF Mess up - Genuine mistake or Fraud

News in short:

1. Australia moves to regulated Virtual Digital Assets:

   The Treasury Department of the Australian Government has issued a proposal paper on regulating digital assets. The new regulatory framework aims to regulate cryptocurrency exchanges and service providers instead of individual cryptocurrencies or tokens themselves. The paper proposes that it will regulate crypto exchanges under pre-existing financial services laws instead of crafting new crypto-specific rules. However, experts have been asking if classifying crypto in the same bucket as traditional financial laws would be the best way?

2. China sets stringent rules regarding data used to train generative AI models

   The National Information Security Standardisation Committee of China has released draft security regulations for companies providing generative AI services, which include restrictions on data sources used for AI model training. The regulations emphasise that data subjects on the Chinese internet should not serve as training material, and that organisations must obtain explicit consent from individuals whose personal data is used for training. These regulations are part of China’s concerted efforts to become a global leader in AI. Given the rate of development of AI Models in China and its divide from regulatory standards of the west, this is a very important development

3. Senate NO FAKES bill to punish makers of AI generated deepfakes

   A bi-partisan group of US Senators have proposed a new bill to ban unauthorised AI replicas of people’s voices and images, named – Nurture Originals, Foster Art, and Keep Entertainment Safe (NO FAKES) Act. This bill comes amid a surge in unauthorised AI generated replicas of songs and videos, essentially replacing actors and other creatives, while carving out exceptions for fair use. The bill seeks to protect people from having their voices and images used without their permission, balancing individual rights and fostering AI innovation. This comes in the wake of the protests in Hollywood by actors surrounding unauthorised use of their likeness. Will be interesting to see how this one plays out.

Article of the week - Global Crypto Regulation finally here?

The 20 biggest economies in the world have decided to adopt the International Monetary Fund and Financial Stability Board’s Policy Paper which was first presented in the G-20 Summit in India.

This is a particularly vital moment for crypto adoption worldwide. Several nations have had to wrestle with crypto policies domestically, but until this point there has been no concerted global effort at standardisation. There has been a growing pushing for a global crypto framework under India’s G-20 presidency. India has compared the global need for crypto regulation to that of civil aviation and now finally there is move towards a global framework.

Finally looks like governments the world over have accepted the inevitable

The salient features of the Policy Paper are as follows:

1. Virtual Digital Asset (VDA) issuers and service providers should have in place a clear disclosure framework which sets out responsibility and accountability for all functions and activities.

2. VDA service providers should have an effective risk management framework in place.

3. VDA issuers and service providers should follow carefully thought-out systems and processes, for collecting, storing, safeguarding, and the timely and accurate reporting of data.

4. VDA issuers and service providers should disclose to users and relevant stakeholders comprehensive, clear, and transparent information regarding their governance framework, operations, risk profiles, and financial conditions, as well as the products they provide and activities they conduct.

5. States must identify and monitor the relevant interconnections, both within the VDA ecosystem, as well as between the VDA ecosystem and the wider financial system, and address financial stability risks that arise from these interconnections and interdependencies.

The Paper also mentioned the need for adoption of Financial Action Task Force (FATF) Guidelines to prevent Money Laundering. It also placed particular emphasis on regulation of Stablecoins, stating that increased storage of value in stablecoins could lead to deteriorating monetary policy control.

Crazy Crypto News - Cointelegraph Bitcoin ETF False Report - Genuine Mistake or Fraud?

On the 16th of October, Cointelegraph posted that the long awaited Bitcoin ETF was approved by the SEC. This lead to a buying frenzy, because ofcourse it did.

Bitcoin jumped to $30,000 from $27,900, leading to a liquidating of close to $80 Million in 24 hours. And then, lo and behold, it turns out that the news was fake!

Bitcoin ETF did not get approved and it was an intern from the Cointelegraph team who jumped the gun and made a mistake. But wait, or was it?

Turns out someone placed a bet on the prices skyrocketing, leading to rampant speculation that the intern had this all mapped out.

This ofcourse led to hilarious reaction from the internet such as this. Enjoy!

Never a dull day in crypto!!

Thank you for reading!

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