​​OpenAI gets warning from Japanese regulators on data collecting

OpenAI gets warning from Japanese regulators on data collecting

June 2, 2023 Coin Telegraph

Japanese privacy watchdog warned OpenAI about collecting sensitive data without permission, threatening further action.

Officials in Japan are beginning to tighten their stance toward artificial intelligence (AI) after the country’s local privacy watchdog warned ChatGPT’s parent company about its data collection methods.

On June 2, Japan’s Personal Information Protection Commission issued a statement asking OpenAI to minimize the sensitive data it collects for machine learning purposes. Additionally, it stresses not to do so without people’s permission.

The commission also highlighted the need to balance its privacy concerns with allowing room to foster innovation and the potential benefits of AI.

However, it did warn that it is prepared to take further action if there are additional issues.

These statements come shortly after the Japanese government submitted a draft from its AI strategy council on May 26, which raised concerns over the lack of regulations for AI and the risks it poses to society.

Japanese lawmaker Takashi Kii said he also would begin pushing for regulations that protect copyright holders from AI algorithm infringement.

In March, ChatGPT was temporarily banned from Italy after scrutiny of its security protocols from Italian regulators. This sparked waves of uncertainty from regulators worldwide, which kicked off probes into the technology by several countries.

At the time, Japanese regulators voiced support for OpenAI. Chief Cabinet Secretary Hirokazu Matsuno even said Japan would consider incorporating AI technology into government systems.

However, Matsuno added that AI integration would only be possible if privacy and security issues were adequately addressed.

An April 30 poll revealed that 69.4% of surveyed Japanese would like stricter regulations in place for AI development. Recent data from Simliarweb showed Japan to be in third place for traffic to OpenAI’s site.

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Japanese AI experts raise concern over bots trained on copyrighted material

June 1, 2023 Coin Telegraph

AI copyright infringement

Japanese lawmaker Takashi Kii says he is pushing for regulation to protect copyright holders from being infringed on by artificial intelligence algorithms.

Japanese artificial intelligence experts and researchers are urging caution over the use of illegally obtained information to train AI, which they believe could lead to “a large number of copyright infringement cases,” as well as job losses, false information and the leaking of confidential information.

On May 26, a draft from the government’s AI strategy council was submitted, raising concerns about the lack of regulation around AI, including the risks the tech poses to copyright infringement.

According to Japanese lawmaker Takashi Kii, there are currently no laws that prohibit artificial intelligence from using copyrighted material and illegally acquired information for training.

“First of all, when I checked the legal system (copyright law) in Japan regarding information analysis by AI, I found that in Japan, whether it is for nonprofit purposes, for-profit purposes, or for acts other than duplication, it is obtained from illegal sites,” said Takashi.

*Takashi Kii speaking at the Second Subcommittee of the House of Representatives Settlement and Administration Oversight Committee. Source: go2senkyo*

“Minister Nagaoka clearly stated that it is possible to use the work for information analysis regardless of the method, regardless of the content," added Takashi, referring to Keiko Nagaoka, the minister of education, culture, sports, science and technology.

Takashi also went on to ask about the guidelines for the use of AI chatbots such as ChatGPT in schools, which also poses its own set of dilemmas, given that the tech is reportedly set to be adopted by the education system as soon as March 2024.

“Minister Nagaoka answered ‘as soon as possible;’ there was no specific answer regarding the timing,” he said.

Speaking to Cointelegraph, Andrew Petale, a lawyer and trademarks attorney at Melbourne-based Y Intellectual Property, says the subject still falls under a “gray area.”

“A large part of what people don’t actually understand is that copyright protects the way ideas are expressed, it doesn’t actually protect the ideas themselves. So in the case of AI, you have a human being inputting information into a program,” he said, adding:

“So the inputs are coming from people, but the actual expression is coming from the AI itself. Once the information has been inputted, it's essentially out of the hands of the person, as it’s being generated or pumped out by the AI.”

“I guess until the legislation recognizes machines or robots as being capable of authorship, it’s really sort of a grey area and sort of a bit in no man’s land.”

Petale added that it poses a lot of hypothetical questions that first need to be solved by legal proceedings and regulation.

“I guess the question is; are the creators of the AI responsible for creating the tool that’s used to infringe copyright, or is it the people who are actually using that to infringe on copyright?” he said.

From the perspective of AI companies, they generally argue that their models do not infringe on copyright as their AI-bots transform original work into something new, which qualifies as fair use under U.S. laws, where most of the action is kicking off.

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XDC Network gets Japanese foothold via partnership with SBI subsidiary

May 31, 2023 Coin Telegraph

Coin Telegraph

After a fruitful spring season, the XDC Network expands its presence in the Japanese market via SBI VC Trade.

The enterprise hybrid blockchain solution, XDC Network — formerly known as XinFin — has broadened its presence in the Japanese market through a partnership with SBI VC Trade, a cryptocurrency exchange subsidiary of Tokyo-based financial holding company SBI.

On May 31, the XDC Network announced that it would be added to SBI’s crypto exchange subsidiary. The exchange’s CEO, Fumiki Ozaki, confirmed the news:

“We are delighted to expand our cryptocurrency offerings by adding XDC to our exchange. XDC Network brings a unique value proposition to the trade finance market, and we believe its addition will enhance our customers' trading experience.”

In March 2023, the XDC token became one of the top 5 altcoin gainers, rising 54% in 30 days. The network supports Ethereum Virtual Machine-compatible smart contracts, protocols and atomic cross-chain token transfers. It also complies with the ISO-20022 message standard, an internationally accepted standard for electronic data interchange between financial institutions.

Recently, the XDC Network decided to decentralize the governance of the blockchain by forming a decentralized autonomous organization. After deployment in May, the community will decide on the distribution of ecosystem funds to promote development. XDC Network co-founder Atul Khekade commented on the newest announcement:

“We are thrilled to partner with SBI VC Trade and bring the XDC ecosystem to the Japanese market. Japan is a crucial hub for international trade, and our blockchain platform aims to streamline this sector by improving transparency, traceability and reducing costs.”

SBI is also raising its presence in key crypto markets. In September 2022, it received a license to operate in Singapore. Earlier, one of its investees, Clear Markets, received approval from the United States Commodity Futures Trading Commission to offer over-the-counter crypto derivatives products with a physical settlement.

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Japan’s largest airline launches NFT marketplace

May 30, 2023 Coin Telegraph

Airline

The platform is part of Air Nippon Airways' ongoing expansion into the intersection of airlines and Web3.

On May 30, Air Nippon Airways (ANA), the largest airline in Japan, launched an aeronautical-themed nonfungible tokens (NFTs) marketplace with its subsidiary ANA Neo.

Dubbed the "ANA GranWhale NFT Marketplace," the platform will feature an inaugural collection created by aerial photographer Luke Ozawa. As told by developers:

"From May 30, aerial photographer Luke Ozawa's first digital photo will be converted to NFT. One of them will be sold with a positive film, which is the source of photo development. The price is 100,000 yen, and the NFT with positive film will be sold at auction."

Meanwhile, the second collection of NFTs will be released on June 7, representing the NFT image conversion of the first Boeing 787 operated by AMA. "Selling as a 3D model airplane. There are 787 items each of the two types, for a total of 1,574 items, and the price is 7,870 yen," ANA wrote.

ANA is Japan's largest airline, with revenues of $12.2 billion in its last fiscal year. The firm said it plans to increase the NFT product line in the future and aims to improve the value of customer experience through NFT commercialization.

The development of ANA Neo's Gran Whale started last August as a virtual travel platform utilizing "technology, including VR, to recreate the destinations and cultures of the world" in the form of metaverse parks. ANA Neo's president, Mitsuo Tomita, previously stated:

"The arrow in the symbol [logo] represents the virtual and the real, respectively, and the fusion of the two symbolizes the ANA GranWhale flying straight into the future with stability and growth, where Web 3.0 and metaverse travel will become more commonplace."

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BitFlyer adopts crypto deposit limits to comply with Travel Rule

May 30, 2023 Coin Telegraph

AML

While adopting restrictions on transactions between exchanges, bitFlyer still supports transactions to and from self-custody wallets like MetaMask.

Cryptocurrency exchanges in Japan are preparing for the enforcement of the Financial Action Task Force’s Anti-Money Laundering (AML) regulations known as the Travel Rule.

On May 30, major Japanese crypto exchange bitFlyer announced the adoption of measures in response to the enforcement of stricter AML standards targeting crypto transactions in Japan.

BitFlyer has introduced restrictions on deposits and transfers, disabling transactions to and from exchanges that are not part of the Travel Rule Universal Solution Technology (TRUST) network. Adopted by major industry firms like Coinbase and Crypto.com, Trust is a platform allowing exchanges to securely manage customer data legally required by the Travel Rule.

*How the TRUST network works. Source: Notabene*

BitFlyer’s latest restrictions relate to 21 countries and regions that require information notification based on the Travel Rule. In the announcement, the listed countries and regions are shown in the table, including jurisdictions like the United States, Canada, Hong Kong, Singapore and others.

There are also restrictions on the types of crypto assets supported by TRUST. BitFlyer currently facilitates TRUST transactions for cryptocurrencies like Bitcoin (BTC) and Ether (ETH), as well as ERC-20 assets like Shiba Inu (SHIB), Polygon (MATIC) and others.

Effective immediately, BitFlyer’s new AML restrictions apply to all corporate and individual customers who deposit and send crypto assets using the exchange.

According to the announcement, Coincheck is the only Japanese exchange part of the TRUST network and can interact with bitFlyer. At the time of writing, Coincheck and bitFlyer only support BTC transactions via TRUST. More cryptocurrencies, including ETH and ERC-20 tokens, are coming in the near future, bitFlyer noted.

While adopting significant restrictions on transactions between exchanges, bitFlyer still supports transactions to and from self-custody wallets like MetaMask.

BitFlyer did not immediately respond to Cointelegraph’s request for comment. This article will be updated pending new information.

The news comes amid Japan’s preparations to enforce new crypto AML restrictions starting from June 1. On May 23, the Japanese parliament decided to strengthen AML measures to bring the local crypto framework in line with global crypto regulations. The new rules require any platform processing a crypto transfer greater than $3,000 to pass on customer data to the recipient exchange or institution.

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Binance kicks off transition to new platform in Japan

May 27, 2023 Coin Telegraph

Asia

The move follows the acquisition of the regulated crypto exchange Sakura Exchange Bitcoin (SEBC) in November 2022.

After five years out of the Japanese market, crypto exchange Binance has begun the process of establishing a new and fully regulated subsidiary in the country. The move follows the acquisition of the regulated crypto exchange Sakura Exchange Bitcoin (SEBC) in November 2022.

As part of the deal, SEBC will cease its current services by May 31 and reopen as Binance Japan in the coming weeks. Users of the exchange's global platform in the country will have to register with the new entity. The migration will be available after August 1, 2023, and will include a new identity verification process (KYC) to comply with local requirements.

Any remaining funds on the SEBC exchange will be automatically converted to Japanese yen and transferred to users' bank accounts beginning in June, Binance previously disclosed.

With a narrowing regulatory landscape, the exchange's strategy for expanding its global reach has been to acquire local regulated entities. Binance made a similar move in Singapore in 2021, in Malaysia in 2022, and in Thailand most recently. In Japan, it shut down operations in 2018, after failing to obtain an independent license from local regulators.

According to a notice on its website, the exchange will not provide derivative services in Japan. Binance's global version will not accept new derivative accounts from users in the country.

Additionally, residents in Japan using the global platform will not be able to increase or open new options positions after June 9. Pending orders will be canceled, and existing positions must be closed before June 23, said the exchange. Binance Leveraged Tokens will not be available for trade or subscription.

"In the future, we plan to continue to enrich our service offerings in Japan and will work closely with regulators to possibly provide derivatives services in a fully compliant manner," the company wrote.

Japan was one of the first nations to introduce crypto regulations. The local laws contributed to the speedy recovery of funds in February at FTX Japan, a subsidiary of the now-bankrupted crypto exchange FTX. Japan's regulations requires crypto exchanges to separate client funds from other assets.

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Japan’s crypto Anti-Money Laundering measures to start in June: Report

May 24, 2023 Coin Telegraph

AML

The Japanese parliament has decided to roll out tougher AML procedures in line with the “travel rule.”

Lawmakers in Japan have decided to enforce stricter Anti-Money Laundering (AML) measures to trace cryptocurrency transactions from June 1.

On May 23, the Japanese parliament made the decision to roll out tougher AML procedures from next month, according to a report the same day from local media outlet Kyodo News.

The move aims to bring Japan’s legal framework in line with global crypto regulations.

Lawmakers revised the AML legislation in December after it was deemed insufficient by the international financial watchdog, the Financial Action Task Force (FATF).

According to reports, a vital feature of the new measures is the enforcement of the “Travel Rule” to keep a more accurate track of criminal proceeds.

The travel rule requires any financial institution processing a crypto transfer greater than $3,000 to pass on customer information to the recipient exchange or institution. The data should include the name and address of the sender and recipient and account information.

The Travel Rule was discussed by global leaders in mid-May at the G7 meeting held in Japan, with the G7 Committee clear in its support of the Travel Rule for crypto transactions.

It supported FATF initiatives on accelerating global standards for crypto “including the ‘travel rule’, and its work on emerging risks, including from DeFi arrangements and peer-to-peer transactions.”

“G7 countries should lead by example and regulate the crypto sector so that no safe havens exist for illicit crypto transactions”#FATF President T. Raja Kumar´s message to #G7 leaders ahead of the summit in Japan
Read article: https://t.co/l1OTdjGgLY
: https://t.co/GqHhVwoqY9 pic.twitter.com/uDurg1QSDu
— FATF (@FATFNews) May 18, 2023

Japan was one of the early adopters of crypto, legalizing it as property. Crypto regulations in Japan are some of the most stringent globally.

Japan’s financial regulator, the Financial Services Agency, tightened rules on crypto exchanges following the major hacks of the exchanges Mt.Gox and Coincheck.

The FSA has several rules for exchanges to protect customers including separate holdings of customer and company assets, with holdings verified in annual audits.

Investors cannot borrow more than twice their investments for leveraged trades on exchanges. Licensed crypto exchanges are also required to hold at least 95% of customer funds in cold wallets.

In April, the Web3 project team of Japan’s ruling Liberal Democratic Party released a white paper proposing ways to expand the country’s crypto industry.

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Japan leads world in losses from North Korean crypto hacking with 30% of total: Report

May 15, 2023 Coin Telegraph

Coin Telegraph

An Elliptic report commissioned by Nikkei says Asian countries account for over 60% of losses to North Korean hackers and ransomware users; lax security played a role.

Japan is the biggest loser of cryptocurrency to North Korean hackers, according to a study by blockchain analytics firm Elliptic. Asian countries make up three of the four top targets for the so-called Hermit Kingdom’s hackers, Elliptic found.

The study, commissioned and reported on by Japanese financial publication Nikkei, looked at losses of cryptocurrency from cyberattacks originating in North Korea from 2017 through 2022. The study took into account both hacking and ransomware attacks. It described the attacks as a “national strategy.”

Japan suffered losses of $721 million in those attacks, which was 30% of the world total of over $2.3 billion, Elliptic found, based on an estimate of $640 million of crypto lost in 2022. According to the United Nations, North Korean crypto theft reached a new high in 2022. Nikkei said:

“According to the Japan External Trade Organization, the $721 million stolen from Japan is 8.8 times greater than the value of North Korea’s exports in 2021.”

Vietnam was the second-most attacked country, according to the report, losing $540 million in that time span. The United States was third with $497 million in losses, and Hong Kong trailed in fourth place with losses of $281 million.

Elliptic: North Korean hackers stole $2.3B in crypto from businesses from 2017 to 2022, including $721M from Japan, $497M from the US, and $281M from Hong Kong (Nikkei Asia)https://t.co/abeNfsBd5k https://t.co/undE8tEmJq
— Techmeme (@Techmeme) May 15, 2023

Elliptic pointed to lax security in Japanese and Vietnamese cryptocurrency markets as the rationale for the hackers’ targeting. Nikkei cites an unnamed source as saying at least three Japanese crypto exchanges have been broken into between 2018 and 2021.

North Korea’s Lazarus Group has been behind some of the biggest heists in crypto, such as the Ronin Bridge exploit and the Harmony Bridge hack. North Koreans have also been alleged to steal nonfungible tokens and to launder their stolen funds through decentralized finance services and crypto mixers.

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G7 pushes accelerating global implementation of ‘travel rule’ for crypto assets

May 15, 2023 Coin Telegraph

bitcoin regulation

Group of 7 members met in Japan, where they discussed CBDCs and crypto regulation, with an eye towards quickly implementing the “travel rule” for crypto assets.

The G7 committee recently met in Niigata, Japan, to discuss, among other topics, the global financial implications for central bank digital currencies (CBDCs) and the laws governing the transfer of cryptocurrency assets.

In a communique summarizing the discussions, the committee reiterated its support for developing CBDCs with the caveat that further investigation was needed to ensure they are grounded in “transparency, the rule of law, sound economic governance, cyber security and data protection.”

The communique described the International Monetary Fund’s (IMF’s) work in developing a “CBDC Handbook” as “welcome,” and said the G7 committee was looking forward to the first set of deliverables to be published by the 2023 World Bank Group and IMF Annual Meetings — slated to take place in Marrakesh, Morocco on Oct. 15.

＼#G7新潟／
G7新潟財務大臣・中央銀行総裁会議は共同声明を採択し、３日間の日程を終えて閉幕しました。
共同声明の詳細はこちら▼https://t.co/V1Vgq4IB4I

写真は、議長国会見の模様です。 pic.twitter.com/Tfytu0R6lw
— 財務省 (@MOF_Japan) May 13, 2023

Committee members also discussed the controversial “travel rule” requiring any financial institution processing cryptocurrency transactions greater than $3,000 to disclose the sender’s name, address, and account information. Per the communique, the committee’s stance was made clear:

“We support initiatives by the Financial Action Task Force (FATF) on accelerating global implementation of the FATF Standards on virtual assets, including the “travel rule”, and its work on emerging risks, including from DeFi arrangements and peer-to-peer transactions.”

The G7 committee comprises representatives from Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, with the European Union serving as a “non-enumerated” member.

The Niigata meeting precedes the annual G7 summit, scheduled to take place in Hiroshima from May 19-21.

While it’s still unclear if U.S. President Joe Biden will attend, as the impending debt ceiling impasse is causing a deadlock in Congress, the Financial Times reports that “the U.S. wants its rich nation partners to increase the economic pressure on China” during the summit.

Interestingly, while Ukraine was mentioned 17 times in the Niigata meeting’s communique (Russia received 18 mentions), China wasn’t mentioned at all.

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May 1, 2023 Bitcoin.com

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